Brazil’s Usiminas Said to Be Seeking Dollar-Bond Renegotiation

  • Most likely outcome is swap for longer dated notes: sources
  • Dollar bond talks would follow June deal with local creditors

Usiminas is exploring a plan to push out maturities on its dollar bonds as part of the Brazilian steelmaker’s broader debt restructuring after prices and demand slumped, people with knowledge of the matter said. 

The Belo Horizonte-based company will offer holders different options to restructure $180 million in notes due 2018, said the people, who asked not to be named because talks are private. The most likely outcome is to swap the notes for longer dated bonds without an explicit haircut, the people said. For now, it’s not offering to buy back the notes, they said.

The dollar-bond proposal follows a June accord with local creditors -- including Itau Unibanco Holding SA, Banco Bradesco SA, Banco do Brasil SA and BNDES -- that gave Usiminas 10 years to pay back debt accounting for 75 percent of the total it’s renegotiating. BNDES confirmed it was extending Usiminas’ 120-day credit standstill after the steelmaker completed a 1 billion-real capital increase.

Usiminas’s press office didn’t return e-mails and calls seeking comment on the dollar-debt negotiations.

The 2018 notes slumped to as low as 27.5 cents on the dollar in February when Brazil’s recession choked off demand for steel, thwarting Usiminas’s efforts to cut leverage. Since then, the bonds have recovered to 86 cents.

Nippon Steel & Sumitomo Metal Corp. and Techint Group, which control Usiminas through a shareholder pact, have been engaged in a long-running battle over how to run the company formally known as Usinas Siderurgicas de Minas Gerais SA.

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