Brazil’s Armco Group Seeks Debt Restructuring to Stabilize Operations

The Armco Group, a leading rerolled steel supplier in Brazil, has filed for extrajudicial recovery in São Paulo to restructure its R$528.6 million ($88 million) debt.

Banco Fibra, owned by the Steinbruch family, is the largest creditor, holding R$350 million ($58 million). When factoring in additional non-recoverable debts of R$220 million ($37 million), the company’s total liabilities rise to nearly R$750 million ($125 million).

The proposed restructuring plan, negotiated with creditors and awaiting judicial approval, aims to protect Armco from collection lawsuits that could disrupt operations. Creditors can opt to convert their debts into newly issued company shares as part of a capital increase.

This voluntary option provides an alternative to traditional repayment. The plan also includes a 24-month grace period, repayment over 120 months, and potential discounts on outstanding amounts.

Armco, founded in 1914 as an American company and Brazilian-owned since 1993, has played a significant role in the country’s industrial growth. It supplies customized steel products for sectors like automotive and construction, with its Jundiaí facility capable of producing 22,000 tons of rerolled steel monthly.

However, the company’s financial health has deteriorated over the past decade due to declining demand for steel products, limited credit access, and costly strategic decisions.

Revenue dropped from R$685.7 million ($114 million) in 2010 to R$348.6 million ($58 million) in 2016. A six-year relocation of operations from São Bernardo do Campo to Jundiaí further strained finances by requiring dual facility expenses.

Key stakeholders like Companhia Siderúrgica Nacional (CSN), another Steinbruch family entity owed R$15 million ($2 million), support the plan alongside Banco Fibra.

If successful, this restructuring could stabilize Armco’s operations while offering insights into challenges facing Brazil’s steel industry and its broader economic implications for investors and policymakers alike.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.