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Cia Siderurgica Nacional SA, Brazil's largest diversified steelmaker, and a group of Asian partners agreed on Friday to move forward with a merger of their mining and logistics assets that would be completed next year.

The board of CSN, as the company is known, approved the grouping of the venture's assets under its Congonhas Minerios SA subsidiary, according to a securities filing. Under terms of the deal, CSN will own 88.25 percent of Congonhas, with the six Asian companies keeping a 11.75 percent stake on a cash and debt-free basis.

Shares of CSN fell to their lowest levels since October 2005, reflecting concern over terms of the accord. The deal, first announced last month, is an attempt to ease a tense relationship among the partners in another venture called Namisa, where CSN failed to honor a multi-year expansion plan.

According to bankers and analysts, CSN sought a merger of the assets to avoid paying $3.01 billion in penalties to its Asian partners for missing Namisa's expansion goals. CSN had warned the partnership would be dissolved if the differences were not resolved.

To finalize the Congonhas deal, CSN and the Asian companies must first agree on a business plan, the filing said. The deal is also subject to regulatory and antitrust approvals.

"While it seems like a move in the right direction ... terms seem very vague to us," said Rodolfo Angele, an analyst with JPMorgan Securities. The deal "does not eliminate the overhang of a put being exercised against CSN."

Common shares of CSN fell as much as 6.9 percent to 4.50 reais on Friday. In contrast, the price on CSN's 6.5 percent bond due July 2020 rose for the first session in nine, touching 89.25 cents on the dollar on optimism that the deal will help CSN stave off the Namisa penalty.

The Asian consortium includes Japan's Itochu Corp, Nisshin Steel Co Ltd, JFE Steel Corp and Kobe Steel Ltd as well as Korea's Posco Ltd and Taiwan's China Steel Corp.

The multinational group bought the stake in Namisa in December 2008, based on CSN's pledge to boost its output capacity to 33 million tonnes by 2015 and build two pellet plants. So far, there has been no significant boost to Namisa's output or shipment capacity.