March 22, 2017 / 4:08 PM / a year ago

Brazil's Usiminas board wants to fire CEO Souza, sources say

SAO PAULO, March 22 (Reuters) - Most members of Usinas Siderúrgicas de Minas Gerais SA’s board want to oust Chief Executive Officer Rômel de Souza for allegedly taking action to replenish the Brazilian steelmaker’s cash balance without the board’s permission, two people with knowledge of the matter said on Wednesday.

More than half of Usiminas’ 11-member board say Souza acted unilaterally to tap cash from mining subsidiary Musa Mineração Usiminas SA, which might have helped trigger the transaction’s collapse in January, according to the sources, who requested anonymity because of the sensitivity of the issue.

A board meeting has been called for Thursday, the sources said. One of them said it could be delayed through an injunction sought by a shareholder interested in keeping Souza. The person declined to identify the shareholder.

Reuters reported on Jan. 13 that Souza and Musa President Wilfred Brujin had agreed to the use of the unit’s excess capital without the steelmaker’s board permission. Souza is also the chairman of Musa.

The episode led to a worsening of a 2-1/2-year rift between the steelmaker’s two top shareholders, Nippon Steel & Sumitomo Metal Corp and Techint Group’s Ternium SA. Ternium and Nippon Steel have been battling over control of Usiminas, which is suffering because of Brazil’s severe recession and high debt.

The document from November showed that two Nippon Steel-appointed members of the Usiminas board suggested Musa could extend a loan to Usiminas to meet a refinancing deadline in June. Usiminas was eventually allowed to tap part of Musa’s excess cash late last year.

If Souza is fired, it would not be the first time that he would be pushed aside from the command of Brazil’s largest listed flat steelmaker. Last May, the board ousted him and put in veteran executive Sergio Leite as CEO. Souza was reinstated weeks later, following a court injunction.

Preferred shares, Usiminas’ most widely traded class of stock, were down 1.5 percent to 4.20 reais and were nearly unchanged year to date.

Usiminas had no immediate comment, and efforts to reach Souza were unsuccessful.

Valor Econômico first reported news of the potential firing earlier in the day. (Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn)

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