Vicunha Siderurgia issues US$510mn in debentures

Brazilian steel holding company Vicunha Siderurgia has issued a long-expected debenture offering worth 1.2bn reais (US$510mn), the company said in a filing to São Paulo's Bovespa stock exchange. Vicunha Siderurgia, which holds a controlling 40.7% stake in integrated steelmaker CSN (NYSE: SID), issued the 1.2bn reais in non-convertible debentures. The debentures, which have a face value of 100,000 reais each, will mature in 2012. A portion of the proceeds from the debt offering will be used to pay off debentures held by Brazil's national development bank BNDES. The payment to BNDES will open the door for the Steinbruch family to buy out its partners, the Rabinovich family. The Steinbruch family will pay an estimated 1.3bn reais to the Rabinovich family for the stake, which is half Vicunha's 40.7% of CSN. The purchase will be paid in installments through 2010. Credit ratings agencies Fitch and Standard & Poor's (S&P) have given the debentures high marks, rating the issue A(bra) and brA+, respectively. But there is some risk involved with the debt offering as Vicunha Siderurgia has no earning assets, relying on dividend payments from CSN as its source of funds, the two ratings agencies said in research reports.