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UPDATE 1-Brazil's Usiminas board seeks to oust CEO, sources say
March 22, 2017 / 6:27 PM / in 8 months

UPDATE 1-Brazil's Usiminas board seeks to oust CEO, sources say

(Adds details on Thursday’s meeting, share performance)

By Guillermo Parra-Bernal

SAO PAULO, March 22 (Reuters) - Most members of Usinas Siderúrgicas de Minas Gerais SA’s board want to oust Chief Executive Officer Rômel de Souza for allegedly taking action to replenish the Brazilian steelmaker’s cash balance without the board’s permission, three people with knowledge of the matter said on Wednesday.

More than half of Usiminas’ 11-member board believes Souza acted unilaterally late last year when negotiating a way to tap cash from mining subsidiary Musa Mineração Usiminas SA, said two people, who asked for anonymity due the sensitivity of the issue. His actions might have helped led to the collapse of the transaction, the people said.

A board meeting has been called for Thursday to discuss the transaction and a potential appointment of executive managers, a third person said. However, the meeting could be delayed through an injunction sought by un unidentified shareholder interested in keeping Souza, whose removal could be easily challenged in court and therefore reversed, said the same person.

Usiminas declined to comment. Souza could not be reached for comment.

Reuters reported on Jan. 13 that Souza and Musa President Wilfred Brujin had agreed to the use of the unit’s excess capital without the steelmaker’s board permission. The document that Souza, who is also the chairman of Musa, signed was a non-binding memorandum of understanding.

The episode led to a worsening of a 2-1/2-year rift between the steelmaker’s two top shareholders, Nippon Steel & Sumitomo Metal Corp and Ternium SA. Ternium and Nippon Steel have been battling over control of Usiminas, which is suffering because of Brazil’s severe recession and high debt.

The document from November showed that two Nippon Steel-appointed members to the Usiminas board suggested Musa could extend a loan to Usiminas to meet a refinancing deadline in June. Usiminas was eventually allowed to tap part of Musa’s excess cash late last year.

If Souza is fired, it would not be the first time that he would be pushed aside from the command of Brazil’s largest listed flat steelmaker. Last May, the board ousted him and put in veteran executive Sergio Leite as CEO. Souza was reinstated weeks later, following a court injunction.

Preferred shares, Usiminas’ most widely traded class of stock, reversed early declines and rose 1 percent to 4.17 reais in mid-afternoon trading in São Paulo. The stock is up 2 percent this year.

Valor Econômico was the first to report news of the potential firing. (Editing by Lisa Von Ahn and Lisa Shumaker)

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