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Gerdau sold two power plants

  • Wednesday, February 21, 2018
  • Source:ferro-alloys.com

  • Keywords:Steel, Gerdau
[Fellow]Gerdau confirmed last night that its board of directors approved the sale of two hydroelectric power plants to Kinross

Gerdau confirmed last night that its board of directors approved the sale of two hydroelectric power plants to Kinross mining company, according to Valor economic information service. The payment will be R $ 835 million. With this, the steel company reaches divestments in the order of R $ 6.3 billion since it began a financial restructuring in 2014. With the two hydroelectric plants, only in the last 45 days the company will have formalized sales that will bring more R $ 3.1 billion in cash and should leave it closer to the target of having a debt equivalent to 2.5 times the Ebitda (profit before interest payments, taxes, depreciation and amortization).

On December 31, the company finalized the sale of steel production plants and cutting/bending operations: in the United States, to US Commercial Metals Company, for 600 million dollars. On January 31, a wire rod production plant in Texas and two processing units in the United States to Optimus Steel, for 92.5 million dollars. These two businesses added to an earlier list of R $ 3.2 billion that includes the sale of its stake in Gallatin Steel, also in the United States, and Sidenor, Spain, in addition to the exit of businesses in Chile, between others.

Gerdau had, in September 2017, a leverage of 3.4 times Ebitda. In an interview with Valor on January 2, André Gerdau Johannpeter said that the long-term plan was to reach a 2.5-fold indicator. Based on the data from September, the latest available - in which the gross debt was R $ 18.7 billion and the cash of R $ 5.1 billion, the net debt would fall from R $ 13.6 thousand million R $ 10.5 billion if the R $ 3.1 billion of the sale of assets realized from there, were added to their cash flow. It is enough to leave the indicator very close to this target, except for the loss of Ebitda of the businesses sold.

In recent years, Gerdau and other Brazilian steelmakers, such as CSN and Usiminas, faced financial problems on account of three factors: falling demand, falling steel prices and oversupply, mainly by China. The prices of the billets, one of Gerdau's specialties, fell to 450 dollars per ton in June 2016. Today, the prices recovered and already reach more than US $ 750, both in Brazil and in the United States.

 

*Amounts in R$ - Brazilian Reais

Source: www.valor.com.br

 

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