Brazil's Usiminas asks banks to extend standstill, sources say (updated)

Banco Bradesco

13/07/2016 22:28

(Recasts with additional sources, comments, details) 
    By Guillermo Parra-Bernal and Alberto Alerigi Jr 
    SAO PAULO, July 13 (Reuters) - Usinas Siderúrgicas de Minas 
Gerais SA, Brazil's No. 1 listed flat steelmaker, is asking 
banks to extend a 120-day standstill agreement covering 4 
billion reais ($1.22 billion) in loans that expires next week in 
a bid to conserve cash, four sources said on Wednesday. 
    Usiminas has contacted Itaú Unibanco Holding SA, Banco 
Bradesco SA and state-controlled lenders Banco do Brasil SA and 
BNDES to stretch out the standstill deadline by between 30 days 
and 60 days, said the sources, who asked for anonymity to speak 
about the matter. 
    "Terms of the definitive contracts have yet to be 
negotiated," said one of the sources. "The initial 120-day 
period was a tentative one ... normally, a little more time is 
required to iron out issues such as guarantees and 
documentation." 
    On June 15, the banks agreed to stretch out Usiminas 
maturities over the next 10 years with a three-year grace period 
on the principal. The refinancing, equivalent to 75 percent of 
the company's debt, is contingent on full approval of a capital 
injection led by controlling shareholders Techint Group and 
Nippon Steel & Sumitomo Metal Corp  5401.T . 
    Usiminas, Banco do Brasil and Bradesco declined to comment. 
Itaú and BNDES did not have an immediate comment. Reuters first 
reported in February that banks and Usiminas were discussing 
terms of a loan refinancing.  urn:newsml:reuters.com:*:nL2N15R0JB  
    Common shares of Usiminas  USIM3.SA  shed 1.4 percent to 7 
reais, while preferred shares  USIM5.SA  added 0.9 percent to 
2.15 reais on Wednesday. 
    At stake is the survival of Usiminas, which was founded 53 
years ago to help supply flat steel for Brazil's thriving 
auto-making and home appliances industries located in the state 
of Minas Gerais and neighboring regions in the country's 
Southeast. 
    Apart from a tempestuous boardroom battle between Techint 
and Nippon Steel, Usiminas has struggled with rising steel 
imports and two years of economic contraction in Brazil. 
    Gross debt was 7.4 billion reais at the end of March, up 4 
percent from a year earlier. Usiminas has 1.7 billion reais in 
cash, down 37 percent in the same period. 
    Terms on an additional 1.7 billion reais worth of 
foreign-denominated debt are being negotiated, the company said 
in June.  
    ($1 = 3.2890 Brazilian reais) 
     
 
 (Reporting by Guillermo Parra-Bernal; Additional reporting by 
Alberto Alerigi Jr in São Paulo; Editing by Sandra Maler and Tom 
Brown) 
 ((guillermo.parra@thomsonreuters.com; Tel: +55-11-5644-7714; 
Mob: +55-119-8346-7153; Reuters Messaging: 
guillermo.parra.thomsonreuters.com@reuters.net)) 
 
Keywords: USIMINAS RESTRUCTURING/