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Gerdau S.A's asset sales strategy remains crucial.

Chicago: Fitch Ratings said Gerdau S.A's (BBB-/Stable Outlook) asset sales strategy remains crucial to prevent a ratings downgrade.

These divestitures drive leverage reduction while the company's operating cash flow contends with the short- to medium term challenging scenario of the long steel sector in Brazil and the U.S. Together with the successful liability management strategy completed during 4Q17, these non-core asset sales are key factors supporting Gerdau's investment grade ratings.

Fitch Ratings is a nationally recognized statistical rating organization (NRSRO) designated by the U.S. Securities and Exchange Commission. Since October 2017, Gerdau has announced close to USD1.1 billion (BRL3.5 billion) in asset sales. This includes the asset sales of the company's long steel operations in Chile for USD154 million, rebar production in the U.S. for USD 600 million, wire rod mill and two downstream facilities also in U.S. for USD93 million, and recently, two hydroelectric power plants based in Brazil for BRL835 million. These asset sales are aligned with Gerdau's strategy to focus on its most profitable assets in the steel segment. The transactions are still subject to regulatory clearances and customary closing conditions and are anticipated to close before calendar year-end of 2018.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:May 5, 2018
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