The board of Brazilian flats steelmaker Usiminas decided on Thursday to oust Nippon Steel-appointed CEO Romel de Souza, according to a securities exchange filing.
Usiminas said most of the board members voted to expel Souza from his position of CEO and vice president of quality and technology. As a result, former CEO Sergio Leite, who is supported by opposing shareholder Ternium, will assume the CEO position at Usiminas.
Leite will also take over the role of vice president of quality and technology, while Ronald Seckelmann was voted as the company’s VP of finance and investor relations and VP of Usiminas’ subsidiaries. Tulio Cesar Do Couto Chipoletti will be the company’s industrial VP, while Takahiro Mori will assume the role of corporate planning VP.
The board decision is expected to result in a new legal battle involving Nippon Steel (NSSMC) and Ternium. Commenting the board’s decision, Nippon Steel said the removal of Souza was “without prior consent of NSSMC.”
“The removal of Mr. Romel [Souza] from the position of the CEO was approved without any legitimate reason and the appointment of Mr. Sergio [Leite] as the new CEO was also approved,” Nippon Steel said in a statement. “NSSMC believes that this is a clear violation of the shareholders’ agreement of Usiminas which requires the prior consensus between NSSMC and Ternium group for the nomination and removal of the CEO.”
Nippon Steel labeled the current scenario experienced by Usiminas as “severe,” due to the downturn of the Brazilian economy, but noted that under the leadership of Souza, Usiminas completed the capital reinforcement through a capital increase in the amount of BRL 1 billion, along with debt restructuring with major banks last year. Since then, the company “has been actively taking measures to improve its profitability and financial strength.”
“NSSMC believes that the March 23 Resolution is against the best interest of USIMINAS and its stakeholders,” Nippon Steel argued.
The statement continued: “The March 23 resolution was made in clear violation of the shareholders’ agreement and without any legitimate reason and, therefore, is invalid. NSSMC will take all necessary legal measures, among others, to annul the March 23 resolution.”