April 6, 2016 / 7:07 PM / 2 years ago

Brazil's CSN gauges sale, partner for Tecon amid debt relief -sources

SAO PAULO, April 6 (Reuters) - Cia Siderúrgica Nacional SA is assessing options besides a sale for container terminal operator Sepetiba Tecon SA after a loan refinancing deal gave the debt-laden Brazilian steelmaker a respite, four sources with direct knowledge of the matter said on Wednesday.

Apart from a full sale, which remains the top option, CSN could look for a minority partner to help expand Tecon, said three of the sources, who requested anonymity because the process is private. Joint ventures are also under consideration, the sources added.

Talks with potential buyers, which include Wilson Sons Ltd , PSA International Pte Ltd, Santos Brasil Participações SA and buyout firm Advent International Corp, are still ongoing, the sources said.

A fourth source said talks have stalled, although they are “far from over.”

A price for Tecon is not being discussed at this point, the sources noted, although bidders seem inclined to pay less than the 1.2 billion reais ($328 million) that Chief Executive Officer Benjamin Steinbruch is believed to want.

Steinbruch, CSN’s controlling shareholder, is resisting pressure to sell Tecon for less despite a 28 percent slump in CSN’s cash holdings last year, one source estimated.

São Paulo-based CSN declined to comment, as did Santos Brasil, Wilson Sons and Boston-based Advent.

Singapore-based PSA did not have an immediate comment.

Hobbled by the impact of slumping iron ore and flat steel prices, Brazil’s harshest recession in over a century and rising borrowing costs, Steinbruch has been forced to consider asset sales after CSN’s debt surged 40 percent last year.

At the end of December, adjusted net debt hit 8.2 times 12-month trailing operational profit, the highest in about 12 years, according to Thomson Reuters estimates.

Steinbruch clinched a refinancing deal in October with state-controlled lenders Banco do Brasil SA and Caixa Econômica Federal SA that extended maturities on almost 6 billion reais worth of loans for a couple of years.

According to the first three sources, the deal has given CSN some additional breathing room to avert a fire-sale of assets. Among the assets that CSN may put on the block is a stake in a railway consortium, the sources said.

The investment banking units of Credit Suisse AG, Banco Bradesco SA and Banco do Brasil are advising CSN on the deal. ($1 = 3.6590 Brazilian reais) (Editing by Tom Brown)

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