Sergio Alfano will take over from Ronald Seckleman as CFO of Brazilian paper manufacturer Klabin on April 1, says a company official. The announcement follows the appointment of Reinoldo Poernbacher as CEO. However, the company says the changes are temporary and possible outside candidates may be brought into both senior positions. “We view these (temporary) changes as positive as the company has suffered from the perception of lackluster management and with its aggressive expansion program, in better hands, the stock could finally come into its own,” says Bradesco in a research note.
Yearly Archives: 2008
Posted inDaily Brief
JPMorgan Wins Peru Securities Contract
JPMorgan has won a contract to provide securities services to Cavali, Peru’s central securities depository. The shop will provide custody and asset administration services to Cavali for its portfolio of global securities. JPM also provides this service to Cedeval, El Salvador’s central securities deposit. “We are expanding region to region among all different types of clients; not only central depositories but we have central banks, insurance companies, pension funds, mutual funds,” says Fabian Banchiero, product segment head for LatAm at JPMorgan Securities Company.
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Moody’s Affirms Mexico’s Asigna
Moody’s has affirmed Mexican derivatives clearing house Asigna at A1 on the global local currency issuer scale with a stable outlook. The agency notes that credit quality is primarily tied to that of its owners, BBVA Bancomer, Banamex, Banco Santander, Scotiabank Inverlat, and JPMorgan. The ratings are limited by the nature of a still developing derivatives market in Mexico and the fact that Asigna remains a young organization with only 10 years of operation.
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Vale and Xstrata Part Reluctantly
Brazil’s Vale has terminated talks on a takeover of Swiss miner Xstrata that could generated $90bn in M&A volume. Optimism among investors and bankers was running high for a deal up until Tuesday, when the companies jointly announced the termination. Using language that clearly indicates disappointment, the pair emphasized that the deal would have created shareholder value, but that an agreement could not be reached. However, they left significant wiggle room for a return to the negotiating table. Vale reserves the right to make an offer for Xstrata within the next six months if Xstrata’s board agrees to one or if there’s a competing bid, while Xstrata believes a deal creates value for both sides. Glencore, which owns 35% of Xstrata, appeared to be the only block, pushing for marketing agreements Vale was not willing to give. A deal could still take place soon, speculates one investor, who points out Glencore may still decide it is willing to sell its stake for an estimated $25.5bn. Vale has already lined up loan financing of up to $50bn to support the cash portion of a bid. That includes tenors ranging from 18 months to 7 years, with margins over Libor from 60bp to 150bp. JPMorgan and Deutsche Bank are advising Xstrata. Glencore is heard to have hired Citi and Morgan Stanley while Credit Suisse is understood to be among Vale’s advisers.
Posted inDaily Brief
Glencore Blamed for Deal Disruption
Sellside analysts and buysiders blame Swiss-based commodity powerhouse Glencore for breaking off the engagement of Vale and Xstrata. “Glencore has dictated the negotiations throughout the whole process, but it feels like they may be overplaying their hand now,” an angry Xstrata shareholder tells LatinFinance. “Incredibly, 65% of the holders are not being represented here – it’s a disenfranchisement of the majority,” he adds, noting both Vale and Xstrata point to possibility of value creation in a merger. “Marketing rights for nickel and the trading commissions that Glencore was asking for were the main reasons the deal didn’t happen,” says a mining analyst at a Sao Paulo bank. The analyst adds that Vale shares should recover following the announcement and that the company may seek other acquisitions, including Southern Copper and Antofagasta if the Xstrata bid truly fails.
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CESP Auction Draws Zero Interest
The Tuesday auction of Sao Paulo electricity generator CESP was abandoned through lack of interest. No company deposited the BRL1.74bn in guarantees required to participate in the sale, which had a minimum price tag of BRL6.6bn. The total required is heard more than double that, factoring in CESP debt, payouts to minority investors and investment in facilities. Local analysts speculate that the failure is specific to CESP, and will not hold back the May 9 auction of rights to build and operate the Jirau hydroelectric plant on the Rio Madeira. The federal government refused to guarantee that CESP hydro concessions that generate 67% of its energy would be renewed when they expire in 2015. It also did not change the BNDES’s mandate to permit it to help finance the deal. At present, the BNDES can only finance projects that increase energy generation, not transfers of control. Politics may well be behind these problems. A CESP sale would have brought billions into the coffers of the Sao Paulo state government, which is headed by Lula’s chief political rival, Jose Serra. The upcoming Jirau auction is a federal project, which Lula has called crucial, and BNDES has already announced willingness to help finance it. Other state utilities (Cemig, Copel, Eletrobras) also face concessions that will expire. If the government does not change the law to permit renewals, they too may face problems.
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Petrobras Preps Bond Revival
Petrobras is on the road in the US and Europe to patch up relations with the buyside following a controversial pullback from the market last month. CFO Almir Barbassa was in New York yesterday and Boston on Monday to meet investors and talk about financing plans, which include placing $1bn-$2bn in the US market this year, according to one sellsider who met with the executive. In February, Petrobras yanked a $500m retap of 6.125% 2016 notes. One investor says the plan is to try a new deal at that tenor again. Like most high-grade LatAm issuers, Petrobras could bring a bond any time if it is willing to pay the going rate. Petrobras was not willing to meet the market’s demands in last month’s aborted sale via Morgan Stanley and BNP Paribas. Citi, HSBC and UBS were tapped to accompany the issuer on its most recent roadshow. “The new issue premium for high grade today is 25bp-30bp over existing levels,” says a trader, who speculates an upcoming offering could reach $750m in size. Separately, Petrobras shareholders have approved a 2-for-1 share split. It will give shareholders one additional share or ADR for each they already hold as of April 25. The stock closed at BRL73.70 Tuesday.
Posted inDaily Brief
Caracas Utility to Repurchase at Least $244m Bonds
Electricidad de Caracas has received consents from the holders of approximately $244.3m, or 93.96%, of its $260m in 10.25% of 2014 bonds as of its early consent date. The offer launched March 7 paid early consents of $1,020 per $1,000. EDC has not indicated how it plans to pay for the repurchase. The buyback expires April 8. ABN AMRO is dealer manager.
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Peru to Sell Sol Bonds
Peru’s Finance Ministry plans to offer up to PES300m bonds on the local market today in an auction, it said. The issue will be a reopening of the 8.2% 2026 bond. Peru announced plans last week to prepay about $1.1bn of World Bank and IDB debt, using both treasury funds and proceeds from new sol-denominated issues.
Posted inDaily Brief
Mexico Could Cut Rates: Banamex
Higher inflation could lead Banxico to cut rates, says Banamex. Two preventive rate cuts of 25bp cut could come as soon as April and May, according to the shop. Mexico’s headline inflation could close at 3.5% in 2008, says Banamex, down from an earlier estimate of 3.8%. The Mexican bank also revised downward its 2008 Mexican GDP forecast to 2.2% from 2.9% amid further deterioration in the US.