May 25, 2016 / 4:11 PM / 2 years ago

UPDATE 4-Brazil's Usiminas taps Leite as CEO in sign of easing dispute

* Brazil’s Usiminas appoints Sergio Leite as CEO

* 6 of Usiminas 11 board members voted for Leite -source

* Nippon Steel to take legal action to get decision annulled (Adds Nippon Steel comment in paragraph 4, bullet points)

By Guillermo Parra-Bernal

SAO PAULO, May 25 (Reuters) - Usinas Siderúrgicas de Minas Gerais SA tapped veteran executive Sergio Leite as chief executive officer on Wednesday, as Brazil’s largest listed flat steelmaker battles to revive a business hurt by a recession, cheap imports and rising debt.

In a securities filing, the board of Belo Horizonte, Brazil-based Usiminas approved a management shuffle in which Ascanio de Figueiredo Silva was picked to replace Leite as senior vice president for sales. Ronald Seckelmann will remain as chief financial officer, the filing said.

Reuters reported earlier in the day that six of Usiminas’ 11 board members had voted to elect Leite. A source who spoke under condition of anonymity said three board members voted against Leite’s nomination and the rest abstained.

Shareholder Nippon Steel said that the resolution for the appointment of the CEO was made without its consent and it intends to take legal action to get the decision annulled.

While the decision may not mark the end of the disagreements between controlling shareholders Nippon Steel & Sumitomo Metal Corp and Techint Group, analysts said that Leite’s appointment could signal that the two-year rift for control of the ailing steelmaker is easing.

The dispute has put the brakes on Usiminas’ efforts to cope with the worst Brazilian recession in decades, rising debt and fiercer competition from Chinese steel imports. The company, which employs around 25,000, shut a mill in the southeastern town of Cubatão late last year due to low steel demand.

“In our opinion, the election of a new CEO should be seen as a positive development for Usiminas,” said Rodolfo Angele, an analyst with JPMorgan Securities. Leite’s election suggests that Techint is regaining space in Usiminas, he added.

The media office of Usiminas declined to comment further, while Techint representatives had no immediate comment.


Voting shares of Usiminas rose 1.3 percent to 4.95 reais on the news, while non-voting shares added 2.4 percent to 1.74 reais. Both classes of stock are down 71 percent and 67 percent, respectively, over the past 12 months.

Apart from Nippon Steel and Techint, which controls steelmaker Ternium SA, the board of Usiminas includes representatives for the mill’s employees, retirees and minority shareholders, including rival Cia Siderúrgica Nacional SA .

A metallurgic engineer, Leite is a four-decade veteran who served as the company’s top sales and commercial strategist for the past four CEOs. He replaces Romel de Souza, who was backed by Nippon Steel.

According to analysts, Leite’s most pressing task is clinching a refinancing of up to 4 billion reais ($1.1 billion) in maturing bank loans.

He is also seen as key to helping Nippon Steel and Techint iron out their differences more swiftly, especially after both firms took part in a 1 billion-real capital injection for Usiminas that was finalized this week.

After two years of Techint-led management that saw Usiminas reverse losses, cut debt, bolster cash and boost productivity, Nippon Steel broke off with the Italian company after accusing some of its executives of mismanaging Usiminas.

Nippon Steel then allied with Brazilian billionaire investor Lírio Parisotto and other minority shareholders to appoint new management and push Techint aside from day-to-day operations. Their bitter battle coincided with the deepening of a slump in Brazil’s demand for cars and home appliances that are made with Usiminas steel. ($1 = 3.6067 Brazilian reais) (With additional reporting by Tatiana Bautzer and Brad Haynes in São Paulo and Yuka Obayashi in Tokyo; Editing by Paul Simao and Alexander Smith)

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