March 8, 2016 / 11:16 PM / 2 years ago

UPDATE 1-Nippon Steel pushing hard for Usiminas cash injection -source

(Adds details of shareholder standoff)

By Alberto Alerigi Jr.

SAO PAULO, March 8 (Reuters) - Japan’s Nippon Steel & Sumitomo Metal Corp will press hard to approve a capital increase for Brazilian steelmaker Usiminas SA this week, with a threat to sue if fellow shareholders block the motion, a source with knowledge of the matter said on Tuesday.

The Japanese group will propose a cash injection of 1 billion reais ($267 million) at a Friday board meeting, and is willing to finance the capital increase alone if the other major shareholder, Italian-Argentinian conglomerate Techint Group, refuses to participate, the same source said.

Nippon Steel is hoping approval of the capital increase will convince the main creditors of Usiminas to refinance its debt and grant a short-term grace period, helping the company avoid filing for bankruptcy protection, the source said.

Nippon and Techint have been at odds over management of Usiminas for more than a year. The last board meeting, in February, ended with no agreement on the capital increase.

If board members block the proposed capital increase, Nippon Steel is ready to sue them for neglecting their fiduciary responsibility, according to the source.

Techint told Reuters in a statement that it will accept a “limited capital increase.” The Italian-Argentine conglomerate said it will also ask Usiminas to use part of the cash available from mining division Musa to bolster liquidity.

Press representatives for Nippon Steel did not respond to a request for comment. ($1 = 3.75 Brazilian reais) (Reporting by Alberto Alerigi Jr, writing by Tatiana Bautzer; Editing by Dan Grebler and Chris Reese)

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