Exclusive: Brazil's CSN sues over Usiminas capital plan - sources
By Tatiana Bautzer and Guillermo Parra-Bernal
SAO PAULO (Reuters) - Cia Siderúrgica Nacional SA (CSN) has asked a Brazilian court to order rival steelmaker Usinas Siderúrgicas de Minas Gerais SA to tap cash from a unit and revise the terms of a capital plan that was passed on Monday, to prevent further losses on CSN's investment in Brazil's No. 1 listed flat steel producer, two sources said.
Last week, CSN (CSNA3.SA: Quote) filed an injunction in a regional court to force Usiminas USIM5.SA to tap 900 million reais ($258 million) in cash sitting at subsidiary Mineração Usiminas SA, said the sources, who asked for anonymity since the process is under seal of secrecy. The injunction was rejected on Friday, the sources said.
The lawsuit will seek to annul terms of the Usiminas capital plan, alleging it will be dilutive and detrimental to minority shareholders, according to the sources. Under terms of the capital plan, Usiminas may fetch 1 billion reais ($279 million) from an offering of voting shares.
The move underscores CSN's efforts to have more say in Usiminas, which is succumbing to rising Chinese imports, a steep recession and a rift between controlling shareholders Nippon Steel & Sumitomo Metal Corp (5401.T: Quote) and Techint Group.
CSN owns 14.1 percent of voting shares and 20.7 percent of non-voting stock of Usiminas, respectively, making it one of the top four shareholders.
CSN declined to comment.
Antitrust watchdog Cade ruled a year ago that CSN could not directly participate on the board of Usiminas. The sources said that CSN is not considering such plans or a tie-up with Usiminas at this point.
CSN considers the proposal of 5 reais a share for the capital increase "too low," according to the sources. Continued...