by Kyriaki Karadelis

Brazil´s Veirano Advogados and Japan´s Nishimura & Asahi have helped a group of Japanese lending banks restructure 7 billion reais (US$2 billion) worth of debt owed by Brazilian steelmaker Usinas Siderúrgicas de Minas Gerais.

The deal, which closed on 12 September, saw four Japanese lenders and five Brazilian lenders renegotiate the terms of their debt instruments with the steelmaker, which goes by Usiminas for short.

Machado, Meyer, Sendacz e Opice Advogados partner Renato Maggio, who was lead counsel to the Brazilian lenders, says the restructuring process took place entirely out of court in comprehensive contractual renegotiations - but that this should not be confused with the Brazilian out-of-court restructuring process known as a recuperação extrajudicial under article 163 of Brazil´s Bankruptcy Law.

As part of the restructuring, certain credit instruments governed by US law pertaining to the Brazilian creditors have been replaced by Brazilian law financing documents. The debtor has also committed to pay back debt in the same amount of dividends distributed to shareholders.

Maggio notes that Usiminas´s creditors came up with the latter idea in view of Brazilian minimum statutory dividends, having been inspired by foreign precedents.

Usiminas used counsel from the São Paulo office of Skadden, Arps, Slate, Meagher & Flom LLP and local firm Ulhôa Canto, Rezende e Guerra - Advogados.

The Japanese lenders include Japan Bank for International Cooperation, the Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank and Sumitomo Banking Corporation.

The Brazilian lenders are Banco do Brasil, Banco Bradesco, Banco Nacional de Desenvolvimento Econômico e Social, BNDES and Itaú Unibanco.

Machado Meyer also provided counsel to a group of Usiminas´ debenture holders who have had their debt restructured.

According to Bloomberg, the deal brings an end to a restructuring process with companies that hold 92 per cent of Usiminas´ debt. The deal also includes a 10-year extended time frame for payment and a three-year grace period before the payment of principal.

Usiminas has been facing trouble from low commodity prices and Brazil´s worst recession in 100 years, as well as an ongoing battle between its shareholders.

A market announcement from 25 August on the company´s website shows responses from Usiminas´ shareholders to a letter from Brazil´s Securities Commission, seeking verification of a news story in Brazilian financial newspaper Valor Econômico that a spin-off of the company, first mooted in 2014, is now back on the table ′′with more force and more concrete measures′′.

Valor cited anonymous sources that one of Usiminas´ major shareholders, Nippon Steel & Sumitomo Metal Corporation, had already hired lawyers to carry out ′′the divorce′′, with Latin America-focused steel products manufacturer Ternium, the other major shareholder of the company´s controlling group, heading in the same direction.

In response to the news article and letter, one the group´s controlling shareholders, Previdencia Usiminas said it had yet to receive a proposal of a split. Meanwhile, Nippon Steel and a consortium of shareholders including Ternium, its subsidiaries, and a subsidiary of Luxembourg-registered steel pipe manufacturer Tenaris, said there was ′′no relevant information′′ to disclose publicly at present, though they would keep the market informed.

In July, Usiminas raised 1 billion reais (around US$300 million) via an issuance of 200 million ordinary shares, with its existing shareholders injecting new capital into the company.

Lawyers who worked on the deal said it was important for the lenders to see Usiminas´ shareholders supporting the company as a show of confidence that its managers can find a solution to its problems.

Counsel to Usiminas

In-house counsel Lívia Ateniense

Ulhôa Canto, Rezende e Guerra - Advogados

Partners Daniel Soares and Paula Costa, and associates Fabricio Bandeira, Rafael Kasiarz and Maria Laura Saback in São Paulo

Skadden, Arps, Slate, Meagher & Flom LLP

Partner Filipe Areno, and associates Lauren Bennett and Jairo Lamatina in São Paulo

Counsel to the Japanese lenders

Veirano Advogados

Partners Ricardo Veirano and Gustavo Moraes, and associate Marcelo Shima in São Paulo

Nishimura & Asahi

Partner Maya Ito, counsel Nathan Schmidt and associates Hiroshi Watanabe and Mihoko Shima in Tokyo

Counsel to Brazilian lenders and debenture holders

Machado, Meyer, Sendacz e Opice Advogados

Partners Renato Maggio and Bruno Racy, and associate Luís Filipe Gentil Pedro in São Paulo

(Latin Lawyer - 20.09.2016)

(Notícia na íntegra)

http://latinlawyer.com/news/article/50264/brazilian-steelmaker-restructures-us2-billion-debt-japanese-local-lenders/