Credit Suisse Said Hired to Sell Indebted Steelmaker Assets

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Cia. Siderurgica Nacional SA, Latin America’s most indebted steelmaker, hired three banks to help it sell assets, people with knowledge of the matter said.

CSN, as the Sao Paulo-based company is known, appointed Banco Bradesco SA and Banco do Brasil SA to sell Sepetiba Tecon SA, which operates a container terminal at the port of Sepetiba in Rio de Janeiro state, for about 1 billion reais ($290 million), according to three of the people, who asked not to be identified because the process is private.

Credit Suisse Group AG was hired to sell CSN’s stake in another Brazilian steelmaker, Usinas Siderurgicas de Minas Gerais SA, known as Usiminas, for which it will seek about 1.5 billion reais, four people said.

Buffeted by slumping global prices, a shrinking domestic economy and surging bond yields, CSN said net debt swelled to

20.8 billion reais, almost five times its market value, with leverage at the highest in more than a decade. Chief Executive Officer Benjamin Steinbruch said last month that CSN wants to sell lower-returning assets as early as this year.

A CSN spokesman in Sao Paulo didn’t provide a comment when asked about its advisers. Press officials at Credit Suisse, Bradesco and Banco do Brasil declined to comment.

Shares of the company, which is also Brazil’s second-largest publicly traded iron-ore producer, dropped 3.5 percent to a 12-year-low 3.05 reais in Sao Paulo.

Distressed Levels

The steelmaker is in talks with creditors to extend the maturity on some of its 7.4 billion reais of debt due in 2016 and 2017, Paulo Caffarelli, CSN’s corporate executive officer, said on an investor call last week.

CSN’s $1.2 billion of bonds due in 2020 fell 7.6 percent to an all-time low of 61.13 cents on Thursday. The yield increased

2.12 percentage points to 19.03 percent, or 17.5 percentage points higher than Treasuries. A spread of 10 percentage points indicates distressed debt.

“The debt is becoming unbearable, causing bond prices to drop to distressed levels,” Cedric Rimaud, director of emerging-market research at Gimme Credit, said in a note to clients. “Until some asset sales are announced, this will continue.”

CSN holds 21 percent of Usiminas’s preferred shares and 14 percent of its rival’s voting stock after several purchases in the market since mid-2010. The stakes, together with a railway consortium investment, may be among assets considered to be sold, CEO Steinbruch said July 13.