SAO PAULO (Reuters) - Nippon Steel & Sumitomo Metal Corp (5401.T) wants to implement a system to alternate command at Brazilian steelmaker Usinas Siderúrgicas de Minas Gerais SA (USIM5.SA) with fellow controlling shareholder Ternium SA, a senior executive said on Tuesday.
Almost three years of boardroom battles between Ternium and Nippon Steel for control of Usiminas have distracted management and hampered efforts to buffer Brazil’s largest listed maker of flat steel from the country’s worst recession on record. Both Nippon Steel and Ternium have tried to secure power over the debt-laden steelmaker through court decisions.
An agreement with Ternium on how to alternate power at Usiminas without having an option to buy out one another needs to be reached quickly, said Kazuhiro Egawa, Nippon Steel’s newly sworn-in head of operations for the Americas.
In a phone interview, Egawa said a March decision by the board of Usiminas to replace a Nippon Steel-backed executive as chief executive officer was illegal. He rebuffed Ternium’s call for the implementation of an exit clause in their shareholder accord, noting that Nippon Steel has no intentions to leave Brazil or Usiminas.
“We have had all type of joint ventures around the world, but the only place where we’ve had problems is Brazil,” Egawa said. “Usiminas remains our main concern in the Americas.”
Egawa declined to list alternatives to end the conflict with Ternium but cited a rotating command as a feasible option. He will focus on convincing Usiminas board members who represent the steelmaker’s employees to endorse such a mechanism.
Writing by Tatiana Bautzer; Editing by Guillermo Parra-Bernal and Cynthia Osterman