(Adds Ternium statement)
RIO DE JANEIRO, March 30 (Reuters) - Nippon Steel & Sumitomo Metal Corp said on Monday it had reported Ternium SA to Brazil’s CVM market regulator for transferring to third parties shares in steelmaker Usiminas, which they jointly control, before a vote to elect a new chairman next week.
The transfer is a clear violation of the shareholder pact and of Brazilian law, Nippon said in a statement which quoted part of the agreement.
The Japanese steelmaker said Ternium’s move was an attempt to influence the vote for a new chairman and board of Usinas Siderurgicas de Minas Gerais S.A., as Usiminas is formally known, by potentially giving more voting power to minority shareholders.
Luxembourg-based steelmaker Ternium said in a written reply to Reuters that it had no knowledge of Nippon’s Steel’s letter to the CVM regulator. The company said it abides by legal and contractual requirements.
Under the shareholder pact, Ternium voting shares automatically vote in line with the controlling shareholder group made up of Ternium and Nippon.
Ternium said last week that it transferred 25 million common Usiminas shares, around 4.9 percent of its stock, to the custody of Brazil’s BM&FBovespa, the company that runs Brazil’s stock market.
Ternium said those shares had been transferred, not sold or loaned out. There is no legal impediment to selling or leasing Usiminas shares, however, and the market will be informed of any eventual transaction, the company said.
Ternium and Nippon have been at loggerheads since the sacking of Usiminas’s former chief executive, Julian Eguren, for inappropriate receipt of money. Eguren, also a former Ternium executive, denies wrongdoing. Ternium continues to demand his reinstatement, which Nippon has refused.
The fraying of the controlling pact has led to a power struggle at Usiminas, and it remains unclear who will win the vote for chairman on April 6. Minority shareholders have put forward independent candidate Marcelo Gasparino, who is currently a board member. (Reporting by Stephen Eisenhammer and Alberto Alerigi; Editing by Jonathan Oatis)