POSCO Holdings to Sell Its 20% Stake in Brazil’s CSP within March

The entire 20 percent stake in Companhia Siderurgica do Pecem (CSP) held by POSCO Holdings will be transferred to ArcelorMittal Brazil, a Dutch steel company.

In a business report released on March 9, POSCO Holdings announced the sale of its stake in CSP, saying, “We are trying to boost our asset efficiency by selling non-core assets to which we do not have management rights.”

Previously, CSP was 50 percent owned by Vale, a Brazilian resource development company, 30 percent by Dongkuk Steel and 20 percent by POSCO Holdings. ArcelorMittal Brazil agreed to take over CSP for approximately US$2.2 billion.

The amount of money that the seller will receive from the buyer has decreased. This is because CSP is carrying a lot of debt due to long-term financial difficulties. CSP’s net borrowings amounted to approximately US$2.3 billion, including sales proceeds.

ArcelorMittal Brazil decided to acquire shares in Vale, Dongkuk Steel, and POSCO Holdings free of charge on the condition that ArcelorMittal Brazil succeed CSP’s debts. In addition, the three companies will additionally pay US$102 million.

“Out of the money to be paid by the three shareholders, the amount to be paid by POSCO Holdings is US$20.4 million equivalent to a 20 percent stake,” POSCO Holdings said in a public disclosure. “If the shareholders pay their dues, ArcelorMittal will repay all of CSP’s borrowings and take over stakes from the shareholders.”

Dongkuk Steel and Vale are also busy working to sell shares. Dongkuk Steel announced through a report about the merger and others announced on the Data Analysis, Retrieval and Transfer System (DART) of the Financial Supervisory Service in Korea on March 10 that it had transferred its 30 percent stake in CSP to ArcelorMittal Brazil. The end date of the transaction between the two sides announced by Dongkuk Steel is Feb. 9.

“We have decided to sell our stake in CSP to ArcelorMittal,” said Vale, the largest shareholder, said on its website on March 9 (local time). “The price of CSP is around US$100,000. The money will be used to pay our outstanding net debts amounting to about US$2.3 billion early.”

ArcelorMittal which will acquire CSP is the world’s second-largest steelmaker as of 2021. It has branches in more than 60 countries. POSCO and Hyundai Steel were ranked sixth and 17th in the world, respectively, in the survey.