Brazil's CSN asset sales remain urgent despite new loan, analysts say

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By Luciana MagalhaesA $1.2 billion bridge loan Brazilian steelmaker CSN BMFBOVESPA:CSNA3 secured from banks last week does little to ease the group's near-term need to sell assets and tackle its ballooning debt, analysts said on Monday."They're in firefighting mode," said Pedro Galdi, an analyst at investment platform AGF. He expects the company to keep prioritizing divestments to raise up to 18 billion reais ($3.4 billion) and rein in its debt, which CSN recently said had surpassed 40 billion reais.At the end of last week, the company signed a binding commitment letter with a group of banks for a syndicated credit facility of $1.2 billion that could be increased to $1.4 billion. In a statement over the weekend, CSN said it intends to use the proceeds to refinance existing debt and pay fees, expenses and other costs related to the facility, adding that the initiative is part of a broader deleveraging plan announced in January."The bridge loan was simply a stopgap to address the problem in the short term, but the company remains under significant pressure," said Igor Guedes, an analyst at Genial Investimentos in Sao Paulo.CSN Chief Financial Officer Marco Rabello said earlier this month the company expects to conclude the sale of control of its cement unit, CSN Cimentos, and the sale of a stake in its future logistics-assets company in the third quarter. The transactions are part of a plan to raise between 15 billion reais and 18 billion reais in capital this year to reduce financial leverage.Rabello said CSN had hired Morgan Stanley to advise on the sale of control of CSN Cimentos and mandated Bradesco and Citibank to advise on the process involving its logistics company. Morgan Stanley has held talks with local and international companies regarding the cement unit sale, including Brazil's Votorantim and holding company J&F S.A., which also controls meatpacker JBS, according to three people familiar with the negotiations. Morgan Stanley, Votorantim, and J&F declined to comment. CSN had no immediate comment.

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