Paranapanema makes plan to invest US$ 278 million
Valor Econômico
It seems Paranapanema, the largest manufacturer of copper in the country, will finally put an end to its long term paralysis. Last week, in Europe, it closed the purchase of a complete plant that will substitute the almost obsolete facility it has had for more than five decades in Santo André, in the Metropolitan Region of São Paulo. It is an emblematic step of the company, whose control was taken over in early 1996 by the pension funds Previ, Petros, Sistel and Aerus besides the BNDESPar. Since then, it has been only able to manage a heavy debt inherited in the deal and a portfolio of assets with more than 60 companies.
"This group does not receive major investments for more than ten years and its production lines are in operation for more than 50 years", told Luiz Antonio Ferraz Júnior, President of the company since August 2008, to Valor. The acquisition in Europe is part of a package of more than R$ 500 million (US$ 278 million) in investments until 2013 in the expansion and modernization of its industrial park. Today, with a lean structure, the company focuses on metallic copper and fertilizers in the State of Bahia and in rolled products, bars, pipes, alloys and connections made in copper in Santo André (SP) and Serra (ES).
Until the end of March, the job of Ferraz, hired in May 2005 as a CFO, was to straighten up the company. "There was a R$ 1.5 billion (US$ 833 million) debt with the shareholders, concentrated in the holding, which did not allow investing in the operational areas". One measure was refraining from using the cash from the operation to pay off debts of the holding. That meant the capitalization of half of the liabilities and sale of an important asset, the tin mine, to pay off the other half. The next steps, until March, were the operational and corporate reorganization and the fiscal recovery. The third step, concluded this year, was the conversion of its preferred shares into common shares, thus creating one single class of shares. This way it opened the way for the migration to the New Market of the BM&FBovespa. The plan is to do so in the second half.
The program of investments aims, besides the expansion, on furnishing its plants modern technologies to have more competitive costs and allow them to offer new products. In the unified company, the goal is to get to 75%, compared to the 50% of 2009, taking advantage of the Brazilian growth foreseen for the next year in several sectors that consume copper - electric and electronic goods, home appliances, civil engineering, machinery and equipment and automotive.
The rolled products unit of Utinga, in Santo André, will be rebuilt with the modern facilities acquired in Europe. They will disembark in Brazil in up to 15 months. The total cost of the project amounts to R$ 150 million (US$ 83 million) and it should be defined until the end of the year. "It will allow us to increase the base of clients", says Ferraz, who will assess, with his team, whether the new plant will be set up in the place of the currently obsolete unit, or whether it be put up at a new site, near a port.
With the enlargement, its capacity will be increased from 26 thousand to 66 thousand tons/year, generating an additional income of US$ 160 million as of 2012. Besides growing, it will be able to produce coils of up to 7 tons, more than the double of those produced today, and wider than the current ones. Another investment, of R$ 50 million (US$ 27.8 million), in the Eluma division is intended to increase from 16 thousand to 36 thousand tons the current capacity of the plant of seamless copper pipes that was located in Capuava, another neighborhood of Santo André. "It will be the most modern pipe unit in the world", says the executive, noticing that the productive processes of the current plant are outdated. "We will be able to have expressive gains in cost and grow in the markets of refrigeration and civil construction".