Brazil Steel Boss Finally Commits to Asset Sales in Debt Fight

Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts

(Bloomberg) -- It may not be the first time investors have heard Brazilian steelmaker CSN is on the verge of selling assets, but Chief Executive Officer Benjamin Steinbruch says before now he hadn’t given his guarantee.

“For the first time, I promised investors to succeed in the de-leveraging of CSN and I want to deliver on this by July,” Steinbruch, whose family controls the company, said in a telephone interview from Sao Paulo on Thursday.

Steinbruch said he became emboldened after completing roadshows earlier this year in which investors told him that more attractive credit ratings beckoned if the company could bring down debt below three times earnings before items. At the end of last year, its ratio of net debt to Ebitda was 5.9, down from 12 in the third quarter of 2015, according to data compiled by Bloomberg. That’s still the highest among major Brazilian steelmakers.

Cia. Siderurgica Nacional SA, as the Sao Paulo-based company is formally known, staged a major recovery in the bond market last year amid advancing debt negotiations. This year, its notes due 2020 have plateaued as the company is yet to sell any sizable assets.

Steinbruch’s hitherto reluctance to sell non-core assets has irked creditors amid drawn-out debt negotiations, according to Mizuho Bank Ltd. analyst Soummo Mukherjee. The CEO’s possible departure from the top job -- to begin a career in politics -- opens the door for more divestment, Mukherjee said.

The CEO joined a political party as part of a potential run for the vice-presidency in October elections, O Estado de S. Paulo reported. Asked about that article, he said while it would be an honor to serve his country, he hadn’t received an invitation to run alongside Ciro Gomes.

Any political aspirations have no connection with asset sales, although he’d be more likely to join a campaign after those transactions are done, he said.

Steinbruch also said he was confident about concluding debt talks with Caixa Economica Federal by the end of this month and that investors will be pleased with the company’s quarterly results scheduled for release next week.

CSN shares rose 3.3 percent in Sao Paulo Thursday and were up 2.8 percent at 10:29 a.m. on Friday, leading gains among Brazilian steelmakers.

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With Business News News On BloombergQuint
Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts