Steelmaker Gets Respite on $2.3 Billion Credit Talks, BNDES Says

Updated on
  • Brazil’s Usiminas given an additional 60 days, state bank says
  • Embattled company’s debt payments had been halted until Friday

Embattled Brazilian steelmaker Usiminas has been given an extra 60 days to renegotiate terms for about 7.4 billion reais ($2.3 billion) of debt with its creditors, state development bank BNDES said.

Usinas Siderurgicas de Minas Gerais SA, as the Belo Horizonte-based company is formally known, has been in talks with the banks about increasing a 120-day credit standstill that was due to expire on Friday. Its Brazilian creditors -- including Itau Unibanco Holding SA, Banco Bradesco SA, Banco do Brasil SA and BNDES -- hold more than half of the outstanding debt.

“The 60-day term was a result of negotiations BNDES had in conjunction with the other banks while it awaits the results of the financial restructuring of the company,” BNDES said Wednesday in an e-mailed statement.

Usiminas’s press office, Bradesco and Banco do Brasil declined to comment and Itau didn’t immediately return e-mails and phone calls.

Capital Increase

The standstill and all potential debt renegotiation has been contingent on a 1 billion-real capital increase that the company has now completed, said two people familiar with the issue who asked not be named because the talks are private. Minority shareholder Cia. Siderurgica Nacional SA had placed 178.8 million reais in judicial escrow while it disputed the capital increase, but that money was liberated on Tuesday night, local newspaper Valor Economico reported.

Usiminas’s joint controlling shareholders Techint-Ternium group and Nippon Steel & Sumitomo Metal Corp. have been engaged in a long-standing fight over how to manage the company. The two sides have argued over the recent appointment of Sergio Leite as the company’s chief executive officer and how to deal with mounting losses and evaporating cash reserves amid a global steel glut exacerbated by Brazil’s deepest recession in a century.

Usiminas rose 1.4 percent to 2.18 reais at 11:44 a.m. in Sao Paulo. The stock has climbed 43 percent in 2016 following two years of losses.