Brazil's Usiminas draws bank refinancing deal respite; shares jump (updated)

Banco Bradesco

15/06/2016 17:35

(Adds debt data, comments throughout) 
    By Guillermo Parra-Bernal and Alberto Alerigi Jr 
    SAO PAULO, June 15 (Reuters) - Usinas Siderúrgicas de Minas 
Gerais SA agreed with banks and local bondholders to refinance 
about 5.4 billion reais ($1.6 billion) in loans and local notes, 
boosting efforts by Brazil's largest listed flat steelmaker to 
overcome a deep crisis. 
    In a Wednesday securities filing, Belo Horizonte-based 
Usiminas said banks agreed to extend maturities over the next 10 
years with a three-year grace period on the principal. A 
spokesman for the company declined to detail additional terms of 
the new arrangement, saying the accord is under banking secrecy. 
    Creditors including Banco do Brasil SA  BBAS3.SA , Banco 
Bradesco SA  BBDC4.SA , Itaú Unibanco Holding SA  ITUB4.SA  and 
state development bank BNDES signed binding refinancing accords 
as part of the deal. The refinancing, equivalent to 75 percent 
of the company's debt, hinges on full approval of a recent 
capital injection of 1 billion reais, the filing added. 
    Reuters had reported in February that banks and Usiminas 
were discussing terms of a refinancing of about 4 billion reais 
in loans. The lender had obtained a 120-day standstill accord 
with creditors on March 22.  urn:newsml:reuters.com:*:nL2N15R0JB 
    Nonvoting shares  USIM5.SA  surged 14 percent to 1.91 reais 
on Wednesday, their biggest intraday gain since Aug. 4, on 
optimism the refinancing will buy the company time to return to 
profitability in Brazil's harshest recession in eight decades. 
 urn:newsml:reuters.com:*:nL2N17L02F The stock is up 24 percent this year.  
    "The probability of financial distress is now materially 
reduced after the recent developments at Usiminas," said 
Leonardo Correa, an analyst with Banco BTG Pactual. 
     
    'ADJUSTED' 
    According to a source with knowledge of the agreement with 
banks, interest on loans with Itaú, Banco do Brasil, BNDES and 
Bradesco was "adjusted," without giving any details. The source, 
who requested anonymity because the deal is confidential, said 
the accord entails no losses for creditors. 
    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 
controlling shareholders Techint Group and Nippon Steel & 
Sumitomo Metal Corp  5401.T , 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 will be negotiated, the spokesman at 
the company said, adding that talks are expected to end next 
month. 
    ($1 = 3.4660 Brazilian reais) 
 
 (Additional reporting by Brad Haynes and Ana Mano in São Paulo; 
Editing by Chizu Nomiyama and W Simon) 
 ((brad.c.haynes@thomsonreuters.com; +55 11 5644 7725; Reuters 
Messaging: brad.c.haynes.thomsonreuters.com@reuters.net)) 
  
((For a copy of the securities filing in Portuguese language, click on  urn:newsml:reuters.com:*:nCVM4z6XGJ)) 
 
Keywords: USIMINAS RESTRUCTURING/