Looking at ways to reduce energy, services and logistics costs at its Cubatao mill, Usiminas said it has put some 1,300 workers on a paid leave from March 9-20. The workers who joined the paid leave work at the mill’s rolling mill and output support areas.
Meanwhile, Usiminas is nearing an expected capital increase, as discussions with the company’s shareholders, Nippon Steel and Ternium Techint, advance.
The steelmaker said in a filing at the nation’s securities exchange commission, CVM, it received a proposal from Nippon Steel to inject up to BRL 1 billion in the company, so the flats producer could negotiate with creditors a standstill (a debit freeze) agreement. The creditors, which are mainly banks, conditioned the operation to the capital injection.
The capital increase proposed by Nippon says the Tokyo-based shareholder could subscribe as much as BRL 1 billion ($276.1 million) in new voting shares. On the other hand, co-controller Ternium proposed as much as BRL 500 million, whose amount is subject to Usiminas having access to cash from its iron ore unit, MUSA.
Usiminas owns a 70 percent stake at MUSA, while Sumitomo owns the other 30 percent stake. Sumitomo said it could help Usiminas have access to the MUSA funds as long as Nippon and Ternium agree to put at least BRL 1 billion in the struggling company.
The discussion happens amid a scenario of complexity for the steelmaker, which could file for bankruptcy protection if a capital increase doesn’t happen.
Meanwhile, competitor Companhia Siderurgica Nacional (CSN), which has a 17 percent stake in Usiminas, filed an injunction to prevent the flats producer from increasing its capital.