Brazilian steelmaker Companhia Siderurgica Nacional (CSN), a minor shareholder at flats producer Usiminas, is preparing a study to oppose its competitor split, according to media reports.
The company aims to convince shareholders and investors at Usiminas that a split will devalue the flats producer.
CSN said preliminary data suggests there is potential for economic, commercial, industrial and business-related losses in the split proposal, which was denied by Usiminas, Ternium and Nippon Steel last week at a securities exchange commission (CVM) filing.
Usiminas along with its majority shareholders, Nippon and Ternium, said they haven’t discussed nor approved any decision.
“In the moment we know how the [split] operation will be made, we’ll take all measures to protect ourselves. We’ll go to CVM and to the courts, [the latter] which can give a right over the losses and damages [caused] to the minority shareholders,” Fabio Spina, a lawyer at CSN, told local newspaper Valor Economico.
A media report noted CSN wants to avoid a loss when the company will have to sell its shares, for which it paid BRL 3 billion.
CSN said one of the first losses resulting from the split of the Usiminas assets would be the loss of synergies between its businesses.
“It makes no sense for the company to be split like that,” said Spina.
“There’s the possibility [for Usiminas] to lose products at its portfolio and have increased debt costs, since banks tend to increase interests to smaller companies,” the lawyer argued.
Under the company split, Nippon would assume the Ipatinga mill in the city of same name in the state of Minas Gerais, while Ternium would get the Cubatao mill in the city of same name in the state of São Paulo.