Brazil steelmaker extends debt-renegotiation talks, says BNDES

Gaziantep / AFP

Brazilian steelmaker Usiminas has extended a 120-day credit standstill that was due to expire on Friday, state development bank BNDES said.
Usiminas has been granted an additional 60 days to negotiate a deal, BNDES said in an e-mailed statement.
Usinas Siderurgicas de Minas Gerais SA, as the Belo Horizonte-based company is formally known, has been in the process of renegotiating about 7.4 billion reais ($2.3 billion) of debt amid high leverage and slumping domestic demand. 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 in its statement.
Usiminas’s press office declined to comment when contacted. Bradesco and Banco do Brasil declined to
comment.
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.