Votorantim Metais Investimentos, a subsidiary of Brazilian commodities powerhouse Grupo Votorantim, has made an unsolicited $422m offer to purchase 20.9% of the shares in Peru’s Minera Milpo, which is traded on the Lima Bolsa. If successful, the bid for 26.2% of the outstanding shares will raise Voto’s stake in Milpo to 51%, according to an executive on the deal. Voto is offering $2.87 for each of the 147m shares it hopes to acquire in the next 20 business days. That is a 13% premium over Thursday’s closing price of PES7.00. Milpo, whose main metals are copper and zinc, will help Voto broaden its growing zinc operations and access a new source of copper. “Copper’s the stuff [Voto] can’t get in Brazil,” says Christopher Ecclestone, mining analyst at Hallgarten. JPMorgan advised Voto on the acquisition, while Milpo is understood to have had little involvement in the hostile bid, and did not hire a bank. “It will be interesting to see if there’s any pickup in resource nationalism as a result of this,” says Ecclestone, adding Chinese companies Chinalco and China Minmetals have recently picked off Peru Copper and Northern Peru Copper, which are listed in Canada.
Yearly Archives: 2008
LatAm M&A Bucks Global Slump
LatAm M&A bankers may be crying over the demise of Vale-Xstrata – which could have added $90bn to the year’s volume – but they are doing much better than their peers in other markets. First quarter targeted volume was $25.86bn from 203 transactions, up 39% year-on-year in volume terms, according to preliminary data from Dealogic. This compares to a 40% decline in global M&A to $652.6bn in 1Q 2008, the lowest since Q1 2004 ($557.3bn). “While volume has decreased, deal count was up 4% from 1Q 2007 driven by deals between $100m and $1bn, now accounting for 40% of global volume, up 13 percentage points from Q1 2007,” says Dealogic. EM targeted M&A activity meanwhile rose 3% year-on-year, to $169.4bn. This was 34% less than in Q4 2007. EM volume was 26% of global M&A volume, up 11 percentage points from Q1 2007 and the highest start to a year on record. “Acquisitions by EM companies into developed markets accounted for 30% of total EM acquirer M&A volume ($50.2bn via 221 deals), up 86% from in Q1 2007 ($26.9bn via 127 deals),” says Dealogic.
Grupo KUO Sheds Phosphate Biz
Mexico’s industrial conglomerate Grupo Kuo has agreed to sell its Quimir phosphate business to chemical firm Mexichem for an undisclosed amount. Kuo plans to use proceeds of the sale to fund projects and pay down debt. Quimir had sales of about $160m last year and specializes in the production of industrial phosphates, used mainly in detergents. Mexichem plans to spend $300m on acquisitions in the near term in Mexico and LatAm.
Usiminas Seeks $1.07bn in Bilateral Financing
Brazil’s Usiminas wants to supplement its aggressive capital and bank market financing activities with additional loans totaling $1.07bn from multilaterals, state and development banks. The company’s board has approved a plan to obtain a $550m 10-year loan from the Japan Bank for International Cooperation, as well as a BRL200m 2-year loan from Banco do Brasil. The Brazilian steelmaker is also in discussions for a loan of up to $400m from the IDB. It did not disclose an exact timetable to obtain the loans. With an ambitious capex plan to fund, Usiminas has sold BRL500m in local debentures and $400m in 7.25% 10-year overseas bonds this year. It is also wrapping up syndication of a $1.2bn loan facility, with 5 and 7-year tranches, paying 110bp and 135bp over Libor, respectively, via HSBC.
Strike Won’t Trigger Argentina Downgrade: S&P
The long term sovereign rating of B+ (stable) that S&P has in Argentina is unlikely to be downgraded by the farmer’s strike. “Nothing has happened so far to change our minds,” says Joydeep Mukherji, an analyst at S&P. “The events that we have seen recently are consistent with a B+ rating.” The fiscal situation in the country, however, remains a key factor for the rating, according to Sebastian Briozzo, an S&P analyst in Buenos Aires. “The downside risk to the ratings of Argentina is more dependent on whatever happens to the fiscal situation, “Briozzo says.
Peru Sells Sol Bonds
Peru has sold PES273m ($99m) in sol-denominated 2026 bonds with a coupon of 6.90%. The retap of the 2026 notes had been planned for PES300m. The average price at auction was 113.58, reflecting a demand of PES559m. Proceeds will go toward the repayment of $1.1bn in multilateral debt this year.
PE Eyes New Brazil Low Cost Airline
David Neeleman, the founder and former CEO of US low-cost airline JetBlue and a Brazilian by birth, has garnered commitments from at least seven private equity shops for $150m in financing to start a new low-cost airline in Brazil, say executives close to the matter. Neeleman, who was ousted by JetBlue’s board last year, is set to receive a $70m installment this month and another $70m at the end of the second quarter from a group of private investors to start the operation, which still has no name. A consortium led by Connecticut-based Pequot Capital includes US firms Weston Presidio, Wexford Capital, Peterson Partners, Zweig Associates and Dimenna & Kadon. Brazil’s GIF Gestao is also investing in the venture. Neeleman has put in $10m of his own capital. The plan, say executives close to the process, is to use the equity to lease Embraer-made aircraft and set up the company, which will compete mainly against Gol with the low-cost model. The airline will be based in Sao Paulo and aims to commence operations in early 2009. It wants to serve most major markets in Brazil with as many as 76 brand-new Embraer aircraft by 2013.
UMS Brings $1.25 in Exchange Warrants
Mexico plans to sell warrants with a notional value of $1.25bn that will allow investors to exchange foreign currency debt for peso debt. On April 2 and 3, investors will be able to purchase two types of warrant that allows them to trade in 21 series of dollar, euro, deutschemark and Italian lira-denominated bonds with maturities between 2009 and 2034 for local bonds. The first warrant has a notional value of about $1bn and offers peso-denominated bonds due 2014, 2017 and 2036. The second is worth roughly $250m and offers 2017 and 2035 debt denominated in UDIs. Holders of the warrants will be able to receive their new bonds on October 9. This is the first Mexican warrant transaction to allow swapping into UDIs, as well as the first time the liquid global 2034s will be involved, according to a banker on the deal. This is the fourth sale of warrants since 2005. The government has exchanged more than $4bn in foreign-currency debt for peso bonds in the last two years. Barclays and Merrill Lynch are managing the transaction.
Paraguay Raises $50m with IDB
The IDB has approved a $50m loan to Paraguay to provide medium and long-term financing for business ventures that support the promotion of competitiveness of the productive sector. The 30-year variable-rate loan, the first from a $150m credit line for investment projects, includes a 5.5-year grace period.
Cooley Assembles LatAm Real Estate Practice
Law firm Cooley Godward Kronish has formed a LatAm real estate group. The new team includes real estate, corporate and tax lawyers, says Thomas O’Connor, chair of the real estate practice at the firm. O’Connor will co-chair the new LatAm group from New York with Mark W. Lipschutz, a counsel to the firm and CEO of Caribbean Property Group, a company that operates several properties in the region. The firm has had a presence in LatAm in the past five years, and has advised on transactions in Puerto Rico, Aruba and Costa Rica, among other countries.