Slumping Steelmaker Usiminas Changes CEO Amid Financial Woesby
Usiminas elects Sergio Leite as CEO at Wednesday board meeting
JPMorgan says move positive, Ternium gaining ‘more space’
Brazilian steelmaker Usiminas elected Sergio Leite as its new chief executive officer at a Wednesday board meeting as it struggles to reduce debt amid a domestic recession.
Leite, a veteran executive at the company, replaces Romel de Souza, Usiminas said in a filing. Ascanio Figueiredo will take Sousa’s previous role as commercial director. Six board members, including those representing co-controlling shareholder Ternium SA, voted to change management while three members from Nippon Steel & Sumitomo Metal Corp. voted against a change, said a person familiar with the proceedings.
Board members nominated by rival steelmaker and minority shareholder Cia. Siderurgica Nacional SA abstained, said the person, who asked not to be named because the vote tally isn’t public.
The board elected Leite to lead the company as it struggles with a heavy debt burden amid Brazil’s deepest two-year recession on record. Usinas Siderurgicas de Minas Gerais SA, as it is formally known, had a 1 billion-real ($278 million) capital increase approved by shareholders in March, a requirement for bank lenders to grant a 120-day standstill deal.
“With the election of Mr. Leite, it seems that Ternium and the Techint group are gaining more space within Usiminas after years of disputes with Nippon Steel,” JPMorgan analyst Rodolfo Angele wrote in a note to clients.
Nippon Steel and Techint Group, which control Usiminas through a shareholder pact, have been engaged in a long-running battle over how to run the company. The Tokyo-based steelmaker issued a statement on Thursday, saying the decision to appoint the new CEO is invalid and the company will take all necessary legal measures to seek among others to annul the resolution.
Usiminas rose 2.4 percent to 1.74 reais on Wednesday in Sao Paulo. Usiminas’ stock had fallen 21 percent in the previous five days, the worst performer on the benchmark Ibovespa index.