Brazilian flats steelmaker Usiminas has reached a loan standstill agreement with both Brazilian and Japanese banks, the company’s creditors, the steelmaker said in a document filing at the nation’s securities exchange commission, CVM.
Under the terms of the deal, Usiminas won’t pay banks its financial obligations for a period of 120 days. The grace period will help the struggling steelmaker to find a way to complete its recently approved BRL 1 billion capital injection proposal.
The company’s major shareholders, Nippon Steel and Ternium Techint, have agreed that a capital injection is fundamental to avoid the company file for bankruptcy protection, however, the two sides haven’t agreed in the way the capital increase should happen.
Usiminas said the agreement reached with the banks could be canceled at any time if the proposed capital increase isn’t approved. Usiminas said it’s currently negotiating with banks a project of finance restructuring, so it could adjust its debt profile to short, medium and long term prospects.
Usiminas’ creditors include Banco do Brasil S.A., Banco Bradesco S.A., Itaú Unibanco S.A., Banco Santander (Brasil) S.A. and BNDES in Brazil, and Japan Bank for International Cooperation (JBIC), The Bank of Tokyo Mitsubishi UFJ Ltd., Mizuho Bank Ltd. and Sumitomo Mitsui Banking Corporation.