Cap Cana, the high end Dominican real estate development, is offering some investors the chance to exit its 2013 9.625% notes, of which there is some $250m outstanding. The company and its financial advisor, New York based Weston Group, will today offer holders the opportunity to cash out of the security at 35 cents on the dollar. The notes were trading around 28 cents Tuesday, according to Weston. In the offer to repurchase the notes, Cap Cana says that it, a third party investor and the Weston Group, all three of whom are collectively offering to repurchase the notes, will accept a minimum of $50m in tendered notes and a maximum of $100m. The repurchase rate is 33.4 cents plus accrued interest, which adds up to 35.0 cents. “We want to cash out whoever needs to get out,” says John Liegey, CEO of the Weston Group. “If [investors] want to stay in the security, we would be ecstatic,” he adds. Cap Cana and Weston will later this week unveil a new security in exchange for the existing 2013s that has a 7-year maturity and a 10% coupon with 1.35% over-collateralization, says Liegey. The existing notes carry a collateralization of 1.25%, he adds. Holders of the new note would end up with an IRR of up to 12.00%, claims the advisor. Weston says its primary concern in this deal is the company’s bondholders and it wants to win their favor so as to be able to come back to the market in the future. “This company will not default on its bonds,” says Liegey. Cap Cana last month says it offered 6 lenders the opportunity to extend a $100m 1-year bridge but they instead chose a haircut of 40 cents, according to company officials.
Yearly Archives: 2008
Argentine Beer Bonds Lose Fizz
Bonds from Argentine brewer Cerveceria y Malteria Quilmes have come off sharply over the last week, more because of Argentine risk in general than anything credit specific, according to analysts. Credit Suisse had the $120m 7.375% of March 2012 bid at 80 late last week, down 20% versus 100 the week before, and most other Argentine corporate bonds are quoted below 50. “Different refinancing options they had are really drying up due to the government’s nationalization of the pension system,” says Joe Bormann, corporate analyst at Fitch, speaking of Argentine corporates in general. Fitch, which rates Quilmes BB, put the beer maker and several other Argentina-based corporates on negative watch in late November, following news of the nationalization. Only a couple of Argentine names – in the energy and telecoms sectors – are trading above 80, Credit Suisse data shows. Analysts generally see the sovereign headed for disaster, with a negative impact inevitable for corporates.
Mexico Train Operator Upsizes HY Notes
Kansas City Southern has priced a $190m issue of senior notes due 2013 with a 13% coupon to yield 16.5%. The deal through Morgan Stanley was upsized from $175m. Proceeds and other borrowings will be used to repurchase $200m aggregate principal amount of its 7.5% senior notes due 2009. KCS has railroad investments in the US Mexico and Panama. International holdings include Kansas City Southern de Mexico, serving northeastern and central Mexico and the port cities of Lazaro Cardenas, Tampico and Veracruz, and a 50% interest in Panama Canal Railway Company, providing ocean-to-ocean freight and passenger service along the Panama Canal. KCS runs what it calls a NAFTA railway system, linking commercial and industrial centers of the US, Mexico and Canada. Settlement is scheduled for Thursday. Moody’s rates the notes B2 (stable).
Colombian Cowboys Go Public
A group of Colombian cattle ranch and agricultural land owners are close to pricing Colombia’s first IPO in a year. Medellin-based Fondo Ganadero (Fogansa) aims to finalize bookbuilding by Friday. The deal was 20% subscribed as of Tuesday. The offering is made up of 20m ordinary shares at COP2,000 per unit, to raise a total of COP40bn ($18m). Bancolombia is running the, the first from its sector in Colombia, according to bankers on it. Agricultural companies in Brazil and Argentina like SLC Agricola, Brasil Agro and Cresud have in recent years tapped equity markets for funds.
Vale Takes African Copper Assets
Vale says it will buy a 50% stake in the subsidiaries of African mining exploration holding company Teal Exploration for CAD81m, which will be taken private for CAD3 per share in cash. Joint venture partner African Rainbow Minerals will own the other half. Although the companies do not say how the deal is being financed, a Canadian analyst who covers Vale says: “this is a very small deal for Vale and it is interesting because for a little more it could have bought a producing copper miner in that part of Africa.” Teal’s subsidiaries operate in the Democratic Republic of Congo, Mozambique, Namibia and Zambia. CIBC World Markets advised Teal, who had Fasken Martineau DuMoulin as legal counsel. The transaction is expected to close in Q4 2009.
Gigante Sells Radio Shack Stake
Grupo Gigante has sold its stake in Radio Shack to Tandy for MXP563.2m after the two did not reach an agreement on how to expand the chain in LatAm. Proceeds from the sale will likely be used to finance future acquisitions by Grupo Gigante. In a letter to the BMV, the company says proceeds will “complement and reinforce the consolidation and growth strategy.” Spokesmen from the companies could not say how the deal is being financed. According to Actinver analyst Marisol Huerta, Radio Shack contributed to 14% of Gigante’s revenue in 2007. She also says Gigante has $400m in cash, which allows the company to look for acquisition opportunities. Gigante recently said it would invest up to $50m to expand Office Depot de Mexico – in which it holds a 50% stake – to Colombia, possibly through acquisitions.
Gold Target Fends Off Bidder
Gold Reserve is fighting off an unsolicited offer from Rusoro Mining, citing a conflict of interest at Rusoro advisor Endeavour Financial. The potential target alleges that Endeavour also provides advisory services to Gold Reserve and has in-depth knowledge of confidential and proprietary information about the miner. Because of this, Gold reserve is seeking an injunction restraining Rusoro and Endeavour from proceeding with the unsolicited offer, significant monetary damages, and various other items. Rusoro is offering to buy each of Gold’s outstanding shares and equity units for three shares of its own. Gold Reserve has retained RBC Capital Markets and JPMorgan as financial advisors, and Fasken Martineau DuMoulin and Baker & MacKenzie as legal advisors to evaluate the offer
Ecuador Seen Pushing for Harsh Haircut
Moody’s has downgraded Ecuador to Ca with a developing outlook from Caa1 on review for possible downgrade and expects significant losses for bondholders. “The new Ca rating for Ecuador, the second lowest in Moody’s rating scale, expresses the likelihood that expected losses will be very high to bondholders, placing Ecuador’s default much closer to that of Argentina in 2002 than that of Uruguay in 2003,” says Moody’s senior analyst Alessandra Alecci. “We expect negotiations with bondholders to be complicated and drawn out with bondholder participation in an exchange perhaps limited by the country’s solvency and its unclear grounds for default,” she adds. “We expect the government to propose a very aggressive 80%-90% reduction in principal and a strong and likely protracted legal battle to ensue, with bondholders trying to enforce their claims against an admittedly solvent and liquid debtor that is not experiencing any form of financial distress,” says Goldman Sachs in note Tuesday. “That is, the default was triggered by manifest ideological and dogmatic unwillingness to pay not any clear economic or financial need for debt relief,” it adds. Ecuador’s debt indicators are among the most favorable in the region and compared to similarly rated peers around the world, says Moody’s. The debt-to-GDP ratio stands at around 23%, well below the 85% level during its previous default in 1999 and Argentina’s 150% prior to the 2002 default, according to the agency. Measured against central government revenues, Ecuador’s debt burden is small at 100%, compared to over 500% in 1999.
Fitch Downgrades EDC
Fitch has cut Venezuela’s EDC to B+ from BB minus, including $650m in senior unsecured notes due 2018 and $260m of notes due 2014 to B+ from BB minus. The cut is due to increased risk of a financial and economic crisis in the country given its tenuous macroeconomic policy framework, sys Fitch. “EDC’s ratings reflect the company’s strong credit linkage with its majority shareholders, PDVSA, as well as with the Bolivarian Republic of Venezuela, its ultimate shareholder,” the agency says. The Venezuelan government is planning to spin off EDC from PDVSA, says Fitch. The agency expects EDC to continue being a state-owned entity and for the linkage between EDC’s credit quality and that of the government to remain strong. Until this transition is complete, EDC is expected to pay dividends to PDVSA of approximately 90%-100% of net income. In Fitch’s view, these dividends, plus capital expenditures, should weaken a currently strong liquidity position and will lead to even higher leverage. Fitch cut the sovereign to B+ from BB minus the previous day.
Moody’s Flags Growing IUSA Risk
Moody’s has cut Industrias Unidas’ (IUSA) $200m in guaranteed senior unsecured notes due 2016 to Caa2 from Caa1 and also downgraded the corporate family rating to Caa1 from B3. It is keeping the ratings on review for possible downgrade amid weak liquidity, high refinancing risk and poor sales and profit performance. As of September 30, IUSA’s consolidated cash position covered only 10% of consolidated short term debt, amounting to about $270m, says Moody’s. Over 75% of short term debt was related to asset backed bank credit facilities available to IUSA’s US subsidiaries which expire in March and May and have not yet been renegotiated. “Moody’s believes that the elimination or reduction in size of these bank lending facilities could cause significant deterioration in IUSA’s liquidity profile, which requires external sources of funding,” says the agency. The Caa2 rating reflects Moody’s concern that the issuer and the guarantors of the notes may not have sufficient cash and operating cashflow to fund all coupon payments due over the next quarters. IUSA is one of Mexico’s largest diversified industrial groups, manufacturing copper-based and electrical products for the housing and electrical power sectors mainly in Mexico and the US.