UPDATE 1-Thyssen mulls keeping part of Steel Americas - source

Fri May 3, 2013 7:01am EDT

* Thyssen, CSN, Vale could each have one third stake-source

* Cap hike of $750 mln for Brazil plant considered - source

* Thyssen declines to comment on possible joint ownership

By Arno Schuetze and Tom Käckenhoff

FRANKFURT, Germany, May 3 (Reuters) - Germany's ThyssenKrupp is considering keeping a stake in Brazilian steel mill CSA, which would force it to inject more money into the business, a person familiar with the matter said.

Thyssen has been trying to find a buyer for its loss-making Steel Americas business, which comprises CSA and a steel plant in the U.S. state of Alabama. Thyssen owns 73 percent of CSA, while Brazilian miner Vale holds the rest.

"One of the options that has emerged is that ThyssenKrupp would sell a one-third stake to (Brazilian steelmaker) CSN . Vale and Thyssen would also hold one third each," the source told Reuters on Friday on condition of anonymity because the talks are private.

To finance necessary investments at CSA, the three owners would inject a total of $750 million in fresh capital, the person added.

Thyssen has said in the past it hoped to find a buyer for Steel Americas by May. It is due to publish results for its fiscal second quarter on May 15, but another person familiar with the talks told Reuters Thyssen was unlikely to be ready to announce a deal by then due to their complexity.

Thyssen spent a combined 12 billion euros ($15.7 billion) to build the Steel Americas mills, but they lost about 1 billion euros in the year ended September 2012.

Thyssen has also said it may sell the sites in Brazil and the United States separately rather than as one package.

On Friday, Thyssen said it aimed to reach a deal on Steel Americas in the near future, adding talks involved Vale, Brazilian state-run development bank BNDES and Brazilian government agencies.

A spokesman for the company declined to comment on whether the option of keeping a stake in CSA was being discussed.

Sources familiar with the matter said Thyssen was also in talks over Steel Americas with CSN, as well as a consortium of ArcelorMittal, the world's biggest steelmaker, and Japan's Nippon Steel.

Both sets of bidders are offering more than $3 billion, but far less than the 3.9-billion-euro book value of the business, the sources said.

Analysts at UBS said market expectations for the sale were so low now that any price above 800 million euros for the whole unit could lift Thyssen's share price.

U.S. Steel and Nucor have put in bids just for the U.S.-based steel mill, the sources familiar with the matter added. Ternium, which controls Brazilian steelmaker Usiminas, said earlier this week that it had pulled out of the bidding.

Due to its disastrous expansion in the Americas, Thyssen last year posted a 4.7-billion-euro loss, while net debt climbed 61 percent to 5.8 billion euros. That prompted the group to looking into ways of strengthening its finances, sources have said in the past.

Thyssen continues to discuss a possible share issue, one source familiar with the matter said. "A cap hike is not a must, but there are scenarios being discussed for which it is clear that that would be needed," the source said.