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ArcelorMittal’s Purchase of CSP Reignites Hope for Court Proceedings
The Companhia Siderúrgica do Pecém, sold to the giant ArcelorMittal in June this year for US$ 2.2 billion, leaves a massive unpaid debt of US$ 50 million. According to the Diário do Nordeste, at least five companies from Ceará, which helped to build one of the largest private investments in the history of Ceará, still have not received payment for services rendered between 2013 and 2015.
According to the Diário do Nordeste, with lawsuits dragging on for years, one of the reported fears among these entrepreneurs is that the exit of shareholders will further stall the cases involving Vale and Posco Engenharia e Construção do Brasil.
Scaffolding Rental Company Suffered a Default of R$ 20 Million
Maqloc, one of the subcontractors for Braco and Dongyang, for the rental of industrial scaffolding used in the construction of CSP, suffered a massive default. In addition to unpaid services, it had to deal with the loss of equipment that went missing. Today, the updated debt totals R$ 20 million.
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Maqloc is trying to manage the liabilities accumulated due to the debts and has had to take “several steps back” while the process drags on in court.
According to the Diário do Nordeste, Maqloc’s lawsuit against Dongyang, CSP, and Posco Engenharia e Construção do Brasil has been in the 2nd Court of the District of São Gonçalo do Amarante since 2016.
Dongyang Construction do Brasil and Braco Owe More Than R$ 5 Million to Magna Locações
For César Jucá, president of Magna Locações – who faces similar problems to those of Maqloc, the announcement of ArcelorMittal’s purchase of CSP has reignited some hope regarding the progress of the lawsuits. “We haven’t had any contact. We are wanting what is ours. We always have this hope of one day getting this money back.”
The debts with Dongyang Construction do Brasil and Braco combined exceed R$ 5 million. About 20% of this amount represents overdue invoices, and the other 80% corresponds to equipment that was also retained and has never been recovered.
When contacted by the Diário do Nordeste for a statement regarding the control of the entry and exit of equipment, “ZPE Ceará, a subsidiary of the Pecém Complex, informs that it has no records of fiscal movement related to the mentioned service, and consequently also has no records of the mentioned equipment movement.”
Even the Supplied Cement Was Not Paid
Apodi, which provided cement for the project starting in 2015, also suffered a default from Dongyang, which currently amounts to R$ 2.38 million. According to Apodi, in May of this year a dispatch was issued “for personal notification of the defendant to regularize the procedural situation, considering the renunciation of mandate. And at the current moment, Cimento Apodi is awaiting a response.”
There are other million-dollar debts involving Dongyang and Braco. Cordeiro Guindastes has open lawsuits that have been dragging since 2014 in the courts of São Gonçalo do Amarante and Fortaleza, both stagnant and currently totaling R$ 4 million.
US$ 50 Million – The Biggest Debt of All!
According to lawyer Frederico Costa, hired to mediate the final payments for the CSP construction contract, the largest debt known involving the construction period of CSP is from Posco Engenharia e Construção do Brasil. He states that the outstanding debt is US$ 50 million.
“And one of the partners, the majority one, Vale, was having problems making this payment, claiming exactly that Posco was not fulfilling its responsibilities to third parties, or at least was not able to demonstrate so,” explains Frederico.
“Then Vale would say: ‘no, you pay, and then I’ll pay you,’ so it became a problem. My job was to try not to get into a fight. Posco did not want arbitration. Work was done, they received the money, did not pay the workers here, not even me,” he laments.
The report from the Diário do Nordeste tried to contact Posco Engenharia e Construção do Brasil and Vale but was unsuccessful.
Did Steel Giant ArcelorMittal Know About the Default When It Bought CSP, or Did It Get Ripped Off?
The lawyer believes it is possible that ArcelorMittal acquired CSP without knowing about what he calls “hidden liabilities.” “It is when the buyer does not know everything that the company he purchased owes. It is in the nature of hidden liabilities to be hidden,” he explains.
According to him, “it won’t be a surprise if ArcelorMittal soon announces arbitration to recalculate the purchase values because the partners may have hidden debts, hidden liabilities,” states Frederico Costa.
When contacted for a statement, ArcelorMittal said it would not comment on the matter and emphasized that “it did not assume control of CSP.”
“The company will not comment on the matter. ArcelorMittal did not assume control of the CSP. The completion of the operation is subject to the fulfillment of precedent conditions, including obtaining regulatory approvals, including from the Administrative Council for Economic Defense (Cade),” says ArcelorMittal’s statement.
credits – Ingrid Coelho/Diário do Nordeste
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