S&P: Gerdau unaffected

Standard & Poor's said that the decision by the Brazilian antitrust authority Conselho Administrativo de Defesa Econômica (CADE) to fine Gerdau SA (foreign currency BB-/stable/--, local currency BB+/stable/--) for anticompetitive practices in Brazil has no immediate affect on Gerdau's ratings.

Last Friday, CADE said that Brazilian nonflat steel companies, including Gerdau, must pay a fine equivalent to 7% of their respective construction steel bars domestic gross sales in 1999, adjusted for inflation to the present value. The decision may still be challenged in Brazilian courts.

The impact of CADE's decision on Gerdau's business and financial profiles is neutral, S&P said. While any potential payment to be made by Gerdau cannot be precisely determined at this time (the company has been granted 30 days to calculate effective steel bar domestic gross sales in 1999, which are reasonably smaller than total domestic gross sales of R$2.7 billion in that year), S&P said it does not believe this possible cash outlay under the terms currently determined by CADE would affect Gerdau's strong liquidity situation or jeopardize its cash flow fundamentals in Brazil in the near term.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.