Brazil's steel company, CSN, is experiencing a severe shock from heaven to hell. In just four years, the conglomerate controlled by Benjamin Steinbruch has slipped from its best performance in history in 2021 to financial distress at the end of 2025. At that time, Steinbruch hailed 2021 as a "historic year", which reached its peak in both business performance and the strengthening of various business sectors. Now, however, the company has been forced to launch a large-scale asset sale plan, aiming to reduce its debt by 18 billion reals, in order to rescue its deteriorating financial situation. The Cost
of Aggressive Expansion: Ten Billion Acquisitions and Interest Rate Pressure
Over the past four years, CSN has spent more than 10 billion reals on acquisitions in cement, energy and logistics. In 2022, it acquired LafargeHolcim's Brazilian cement assets for US $1.025 billion, ranking second in the country; before that, it also acquired Elizabeth Cement Company in Paraíba for 1.1 billion reals, with a market share of 21%. In 2024, it tried to buy InterCement and assume about 10 billion reals of debt, but fortunately the deal failed, otherwise the financial situation would be more serious. In the energy sector, the acquisition of several power companies in Rio Grande do Sul and Santa Catarina in 2022 will cost more than 3 billion reals. In December 2024, it acquired 70% of Tora Transport Company for 742.5 million reals to strengthen multimodal transport logistics.
However, the expansion has coincided with a surge in Brazil's benchmark interest rate, SELIC, from 2% in 2021 to 15% today. Last year, the company paid about 7 billion reais in debt interest, which seriously eroded cash flow. To make matters worse, since mid-2023, a large influx of Chinese steel has hit CSN's high value-added product market with about 70% of imported steel. Steinbruch said CSN was the hardest hit company and hoped that the government's anti-dumping measures and import tariff increases would bring relief. At the end of
2025, CSN had a difficult end under the double pressure of creditor credit rating agencies-S & P Global downgraded its rating in November, followed by Fitch and Moody's, which downgraded again before the official earnings release. Financial leverage has been rising since the beginning of 2024, and the market has long expected another loss in 2025. In the end, the net loss of the company was 1.5 billion reals, the same as in 2024, and both operating cash flow and free cash flow were negative. Net debt soared to 41.2 billion reais, with total debt of 57 billion reais minus cash of 16 billion reais. Cash reserves have shrunk by 9 billion reals in a year, and the financial leverage ratio has risen to 3.47 times, far exceeding the acceptable limit of three times in the financial market. Even for infrastructure companies, four times is the limit of tolerance.
Emergency self-help: 18 billion reais deleveraging plan
In October 2024, after the third quarter data came out, the red light was on. In urgent consultations with executives and financial advisers, Steinbruch laid out a plan to drastically reduce net debt, targeting the sale of assets and equity of 15 billion to 18 billion reals. In early 2025, the company transferred an 11% stake in CSN Mining Company to Itochu Corporation of Japan at a price of 4.4 billion reals to supplement cash. At the end of the year, through "internal operation", 13% of MRS Railway Company was sold to CSN Mining for 3.35 billion reals, and the subsidiary funds were transferred to the parent company's account. On January 15
this year, the formal deleveraging plan was launched, and the target was to complete the signing of the transaction in the fourth quarter. Core initiatives include the sale of a controlling stake in the cement business and the sale of up to 30% to infrastructure holding companies, one each in Southeast and Northeast. Morgan Stanley acted as financial adviser to CSN's cement business, while Bradesco Bank and Citibank were responsible for infrastructure assets. Steinbruch stressed to investors that the increase in leverage was a "one-off", mainly due to the increase in debt interest expenses and investment activities, and promised to reverse the situation as performance improved from this quarter.
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