Brazilian steelmaker Gerdau was set to close the books on an offering worth up to $2bn last night. Pricing hadn’t been finalized, but the company was heard to be getting pushback from investors who were demanding a wider discount to the offering, according to a person close to the process. Gerdau was heard considering offering the shares at discount of between 3%-4% — a substantial haircut given the company’s celebrity status among LatAm credits. But one Brazilian buysider said he didn’t participate because he saw Gerdau’s current valuation as too rich. “Gerdau and CSN are trading at multiples of around 8.0x-8.5x, which is too high in my opinion,” he notes. “Usiminas looks much better at around 6.0x.” That may be the thinking the institutions eyeing Gerdau yesterday were thinking. In any case, the offering, which includes Bovespa shares and ADS of Metalurgica Gerdau and Gerdau SA is expected be completed. JPMorgan and Itau BBA have the books.
Yearly Archives: 2008
BP Clinches Brazil Ethanol JV
In another Brazilian fuel transaction announced yesterday, UK oil giant BP said it will pay $59.8m for a 50% stake in Tropical BioEnergia, a joint venture between Brazil’s SantelisaVale and the Maeda Group. Tropical is currently building an ethanol refinery in the state of Goias, and plans to build a second, bringing the total investment to $1bn. BP will provide funding for Tropical’s investments. Following the deal, the Brazilian companies will each own 25% of the joint venture. ING advised Santelisa and Maeda on the transaction, which is expected to be completed before the end of June 2008.
Cosan Takes on Petrobras
With the purchase of Esso’s distribution assets, which include facilities that cater to retail, wholesale and aviation clients, the once lone sugarcane crushing mill Cosan is now set to take on some of Brazil’s biggest gasoline and ethanol retailers, including Petrobras. With the new assets, Cosan will have a more than 7% market share in Brazil. The sugar and ethanol company also gets Esso’s lubricants and specialty businesses, including a blending plant in Rio de Janeiro. And aside from Esso’s gas stations, Cosan will acquire 21 storage and distribution facilities. S&P placed Cosan’s outlook on negative yesterday following the announcement, citing uncertainties about the company’s plan to finance the deal. Cosan has roughly $870m in outstanding dollar debt, including a $450m perpetual and a $400m 2017 note.
Cosan Shells Out $950m for Esso Assets
Brazilian ethanol giant Cosan has acquired Esso Brasileira de Petroleo from ExxonMobil for a total consideration of $954m. Cosan paid $826m for 100% of Esso’s equity, and took on $163m in debt and $35m in receivables. “We consider this acquisition price very attractive,” Cosan’s CFO Paulo Diniz said on a call following the announcement. Cosan outbid Petrobras in an auction for the assets. While he claims the company’s current liquidity position would allow it to pay for the target outright, Diniz said Cosan will apply $310m it received from a rights offering earlier this year towards the purchase, Diniz adds. The remainder will be financed in the markets, most likely in the debt markets, he said. One banker away from the deal said the company is eyeing a loan market transaction. A Cosan IR officer tells LatinFinance the company will take the next few months to decide on the best asset class to tap. She also suggested Cosan’s current banks Morgan Stanley and Goldman Sachs, which advised Cosan on the purchase, as well as Credit Suisse, are likely to be tapped for a financing mandate.
Guatemalan Hybrids Expected to Price
Guatemala’s Banco Industrial is expected to price an issue of Tier 1 hybrid securities as soon as today. Guidance of 9-10% was put out earlier this week for the 60-year notes. The issue is rated B+ by Fitch and Ba3 by Moody’s, both of whom expect to assign the equity credit to the notes. Credit Suisse is managing the sale.
Moody’s Rates Editora Abril
Moody’s has assigned a Ba3 local currency rating and an A3 Brazil national scale rating to publishing house Editora Abril with a stable outlook. Abril’s ratings are supported by improving leverage and coverage ratios, and sustainable growth in Brazil’s advertizing market, Moody’s said. The agency identifies negative factors including the cyclical nature of advertising, seasonality of business and a complicated ownership structure.
Magnesita gets Ba1 from Moody’s
Moody’s assigned a rating of Ba1 on a global scale and Aa2 on the local scale to Brazilian manufacturer Magnesita. The outlook is stable. The ratings take into account the fact that Magnesita is the country’s largest supplier of refractories to the steel and cement industries. “In addition, the rating incorporates the company’s healthy operating margins deriving from globally competitive production costs thanks largely to a high level of vertical integration and efficient logistics,” Moody’s adds.
Vale Reshuffles Director Roles
Brazilian mining giant Vale says Gabriel Stoliar and José Lancaster, two of the company’s board directors, will leave, and that their duties will be transferred over to the remaining members. Demian Fiocca, the former president of the BNDES, will take over as executive director for management and sustainability, which includes corporate communications and institutional relations, corporate development, IT, and environmental sustainability. Tito Martins will become executive director of non ferrous minerals and energy, encompassing copper, coal, aluminum, non ferrous metals projects and industrial minerals and energy. José Carlos Martins and Fabio Barbosa, CFO, will be responsible for steel partnerships and business development, respectively. The two departing directors won’t be replaced, says Vale.
Mexican Lender Taps IFC for Funds
The IFC has agreed to provide a $40m equivalent peso revolver to Hipotecaria Vertice, and take a $6m 15% equity stake in the Mexican mortgage lender. “The new facility allows us to have more competitive products and rates,” Samuel Suchowiecky, CEO of Vertice, tells LatinFinance. He explains that Vertice is about to roll out products targeting specific niches among low and middle-income borrowers. Vertice’s goal is to reach 3,000 mortgages worth $90m-$120m this year, he says. The lender had a MXP500m construction bridge loan securitization last year issued from a MXP2bn shelf, and plans to place another in the next few months. By early 2009, Vertice expects its first RMBS issue says Suchowiecky.
Bullish Earnings Season Ahead: Citi
LatAm companies will see earnings growth of 25% and Ebitda expansion of 33% in the coming round of earnings announcements, according to Citi. The bank’s analysts refer to the 122 LatAm stocks Citi covers in the region. The shop sees Brazilian companies leading expectations in Q1 both in terms of top line and Ebitda growth, where it foresees expansion of 46% and 39% respectively. In Mexico, those two metrics are expected to come in at 20% and 16% respectively, says the shop. Brazil is also home to the greatest number of growth stocks, or those which may deliver year-on-year growth forecasts of more than 50%. The following fall under the growth category for Citi: LAME, Dufry, Datasul, Rodobens, Gafisa, Cyrela, Brascan, PDG, Marfrig, Embraer, LUPA3, Ultrapar in Brazil. In Mexico, Mexichem, ICA.