CSN (CSNA3.SA): Cement Sale: A Necessary Step Towards Deleveraging, but Challenges Remain

Citi assesses CSN's agreement to sell its cement division CSN Cimentos Brasil to China's Huaxin Building Materials Group at an enterprise value of R$12.7bn, subject to closing adjustments and approvals from Brazil's antitrust regulator CADE, prior consent from ANEEL and other regulatory clearances. Assuming closing by year-end 2026 and repayment of the US$1.2bn bridge loan with proceeds, Citi estimates pro-forma 2026 leverage falling to 3.9x from a prior 4.6x, a 0.7x reduction that already includes the roughly R$3.0bn SWT divestment. For 2027, net debt is seen at R$32.6bn and adjusted EBITDA at R$8.2bn, implying about 4.0x leverage, with EBITDA declining as cement contributions exit. Citi views the divestment as necessary and an important step in the right direction, and notes management has also delivered the SWT sale, showing commitment to faster deleveraging. Still, the financial situation remains finely balanced given the steepening Brazilian yield curve and a challenging leverage