Brazil's CSN Targets $3.3B Debt Cut via Asset Sales

Key Divestment Plan Highlights

Brazilian steelmaker CSN has announced a major divestment strategy aimed at reducing its debt by 15 billion to 18 billion reais, equivalent to $2.78 billion to $3.34 billion. The plan involves selling significant assets, including its cement division and a stake in an infrastructure unit.

Company and Market Overview

As one of Brazil's largest steel and mining companies, CSN has faced challenges from a high debt load and increased competition from cheaper steel imports. The company's leverage ratio stood at 3.14 times its net debt to core earnings at the end of the last reported quarter.

Financial and Stock Impact

The announcement caused volatility in CSN's shares, which initially rose 4.9% before declining 5% on the Bovespa index. Analysts view the strategic plan as positive but emphasize that successful execution is critical. CSN's long-term goal is to reduce its leverage ratio to 1.0x and double its core earnings within eight years.

Summary and Outlook

CEO Benjamin Steinbruch confirmed that lowering debt is the company's top priority. Importantly, the plan excludes the sale of its highly profitable iron ore producer, CSN Mineracao, which is considered a core value asset. Market focus will now shift to the execution of these significant asset sales.

FAQ

Q: What is CSN's main goal with the asset sales?
A: To reduce its debt by up to $3.34 billion and lower its leverage ratio to 1.0x within eight years.

Q: Which major assets will CSN sell?
A: CSN plans to sell control of its cement division and a significant stake in its infrastructure unit, which includes railway and port assets.

Q: Is CSN selling its mining business?
A: No, the company has stated it has no intention of selling an additional stake in its iron ore producer, CSN Mineracao.

Source: Investing.com