Usiminas Picks Chairman as Board Spat Opens Door for Tycoon

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Usinas Siderurgicas de Minas Gerais SA appointed a new chairman as minority shareholders including billionaire Lirio Parisotto stepped into a fight between Nippon Steel & Sumitomo Metal Corp. and Italy’s Techint Group over control of the Brazilian steelmaker.

After a shareholder meeting of more than five hours, board member Marcelo Gasparino was elected chairman of the company known as Usiminas, according to a regulatory filing. Parisotto was elected to the board to represent minority shareholders during the meeting at the company’s headquarters in Belo Horizonte in Brazil’s southeast.

The conflict between Nippon Steel and Techint blew into the open last year as the two major shareholders fought over company management as steel demand slumped and the shares plunged. Last September, Chief Executive Officer Julian Eguren and two other Techint-appointed officials were pushed out.

The appointments are another round in a dispute that probably won’t be solved any time soon, Banco Itau BBA SA analysts led by Marcos Assumpcao wrote in a note to clients Tuesday.

“A peaceful understanding between the controlling shareholders is becoming less likely,” the analysts wrote. “The dispute is negative for the company’s operating performance” as it distracts controlling shareholders.

Usiminas voting shares jumped 9.3 percent to 18.89 reais at the close in Sao Paulo on Tuesday while the preferred stock, which averages more than five times more trading volume, dropped 5 percent to 4.80 reais, the most since Feb. 12.

“We are going to work for both controllers to reach a consensus,” Parisotto, 61, said in a telephone interview from Sao Paulo after the meeting. “Our objective is get there and try to establish some peace.”

Parisotto was put up as director by minority shareholders after his Geracao L Par fund built a 5.2 percent stake in Usiminas preferred shares and 1 percent of voting stock. Parisotto, who said he cannot be a full-time chairman, backed Gasparino for the position.

Who Loses?

The meeting, attended by about 80 people including dozens of lawyers and advisers, saw a few tense moments and interruptions as Nippon Steel and Techint representatives tried to reach a last-minute consensus on the chairman. Shareholders including the controllers and Grupo BTG Pactual presented at least 10 declaration and protest notes, according to the minutes of the meeting released by Usiminas.

Without a consensus, the controlling group’s combined 380.8 million shares voted against the two candidates presented by the minorities following rules of the shareholders pact. That left the group led by Parisotto’s Geracao L Par representing 22.5 million voting shares to choose Gasparino, beating out a proposal by BTG, according to the minutes.

The vote means the controlling shareholders lost out to the minority, which is unheard of, Marcelo Trindade, a lawyer representing Techint, said after the meeting.

Consensus Lacking

“The lack of consensus between controllers stems from the fact that one of the controllers thinks it can do what it wants,” he said.

Nippon Steel believes Usiminas’s daily operations are going smoothly, the company said in an e-mailed statement after the shareholder vote.

“We intend to fulfill our responsibility to stabilize Usiminas’ operations and make the business grow under the new chairman,” the company said.

Techint has about 38 percent of voting shares in Usiminas through several units, while the Japanese group including some proxies hold about 31 percent, according to data compiled by Bloomberg.

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