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    Market Segment

    October 13, 2013

    Bank of America Brazil Analyst Believes TK Deal Near

    Written by Sandy Williams

    SMU learned in a recent conference call held by Bank of America Merrill Lynch analysts that CSN is no longer interested in the ThyssenKrupp Brazil assets.  Thiago Lofiego, senior Latin American Mining & Steel analyst at BofAML said CSN now appears to be interested in purchasing only the TK Alabama assets for a price in the range of $1-$1.5 billion dollars.  Rumors have been indicating an announcement of a deal may be forthcoming this week or next said Lofiego.

    According to the analyst, the Brazilian slab plant is currently operating on essentially a zero margin due to the high cost of making slab in Brazil ($500-$550 per metric ton).  The mill has been plagued with operating problems that even if fixed would still leave the operation unprofitable.  A buyer would need to add a hot rolling mill in Brazil or shut down, said Lofiego, because the plant is making zero or negative EBITDA.

    Sandy Williams

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