UPDATE 1-CSN still interested in Thyssen's Steel America unit-sources

Fri Mar 15, 2013 1:05pm EDT

* CSN is finalizing funding details ahead of proposal

* Sources said Brazil's CSN is eyeing Steel Americas

* Deal for Thyssen is moving ahead well, source says

* Ternium bid for Thyssen's CSA unit, Valor reported

By Sabrina Lorenzi and Guillermo Parra-Bernal

RIO DE JANEIRO/SAO PAULO, March 15 (Reuters) - Brazilian steelmaker CSN, or Cia Siderúrgica Nacional SA, is still in the race to purchase ThyssenKrupp AG's Steel Americas unit, two sources with knowledge of the situation told Reuters on Friday.

CSN is ironing out financing conditions with Brazil's state development bank BNDES that could make the acquisition of Steel Americas more feasible, one of the sources said in the condition of anonymity. For months, CSN has been looking for ways to make BNDES a partner in the acquisition, Reuters reported recently.

An answer from ThyssenKrupp on the sale is expected by the end of March, both sources said. CSN is offering $3.8 billion for Steel Americas, which is comprised of a slab processing plant in Alabama and a 73 percent stake in Brazilian slabmaking mill CSA..

"The process is now in ThyssenKrupp's hands," said the first source.

A potential acquisition of Steel Americas is seen as having negative implications for CSN, whose stock has shed about 30 percent since news of the bid emerged. Analysts such as Deutsche Bank Securities' Rodrigo Barros said the purchase would contribute negative earnings before interest, tax, depreciation and amortization for CSN, boost debt and distract management from undertaking more profitable projects.

Spokespeople for CSN and ThyssenKrupp declined to comment. Calls to a Ternium spokesman in Buenos Aires were not immediately answered. A BNDES spokesman did not respond to calls on his mobile phone seeking comment.

It is not clear whether BNDES could extend a credit facility to CSN or participate in the deal as a partner. For months, there has been speculation the Brazilian government would bless the purchase as a way to keep Thyssen's assets in Brazilian hands.

TERNIUM BIDDING?

CSN shares fell 0.1 percent to 10.09 reais, extending their drop in the past 12 months to 14.2 percent.

The second source said ThyssenKrupp wants to conclude the sale of Steel Americas before the end of September. A third source told Reuters on Friday that a number of consortia are still eyeing a potential purchase of part or all of Steel Americas and that the process is moving ahead well.

Brazilian Valor Econômico newspaper reported that Italian-Argentine steelmaker Ternium SA was planning to make a binding offer for Thyssen's CSA mill in Brazil. The proposal by Ternium is not "financially attractive," which could lead ThyssenKrupp to put off the process for a few months, Valor reported.

The Valor report highlighted the challenges facing the German company as it seeks to shed money-losing assets like CSA to restore investor confidence.

ThyssenKrupp took a big writedown on the value of the Steel Americas unit last year. The company sought to carve out new markets with the construction of two mills in Brazil and the United States during the middle of the last decade but the projects were hit by cost overruns, poor project management and weaker-than-expected demand.