DUESSELDORF, Germany, Sept 3 (Reuters) - There is a chance that German steelmaker ThyssenKrupp could end up keeping its loss-making Steel Americas business, after trying for more than a year to find a buyer for the plants in Brazil and Alabama, a person close to the matter said.
“Plan B is to keep the plants,” the person told Reuters following a meeting of ThyssenKrupp’s supervisory board on Tuesday.
Holding on to the plants is just one of several options, the source said.
A second person said there was hardly any hope that a deal could be struck to sell the plants.
ThyssenKrupp wants to sell Steel Americas because the business is sapping its finances and slowing a planned shift from its traditional steel business to higher-margin products and services such as elevators, submarines and parts for manufacturing plants.
Sources have said in the past that ThyssenKrupp was in talks with Brazil’s Companhia Siderurgica Nacional (CSN), among others.
“You cannot negotiate forever if the other side just wants to push down the price,” the source said, adding ThyssenKrupp could cut the plants’ output for now to cut costs.
A German newspaper earlier reported that ThyssenKrupp was set to set to scrap the sale of Steel Americas to launch a quick and much-needed capital increase. ThyssenKrupp brushed off the report, saying sales talks were continuing with no change.
But pressure is rising on Chief Executive Heinrich Hiesinger to find a solution quickly as ThyssenKrupp, a symbol of Germany’s industrial prowess, is at risk of breaching loan covenants when its financial year ends at the end of the month.
At the end of June, its gearing ratio - how much debt it has compared to equity - had jumped to 185.7 percent from 148.2 percent three months earlier.
If it remains above 150 percent at the end of ThyssenKrupp’s fiscal year, banks could cancel an undrawn 2.5 billion euro ($3.3 billion) credit line because of a breach of covenants.