Chile’s La Polar plans to seek creditor approval of a judicial agreement to rework its debt and avoid bankruptcy, it says. The Chilean retailer needs the agreement to proceed with a planned CLP100bn capital increase after it set aside loan-loss provisions topping CLP500bn ($1.01bn) last month for consumer-lending losses and fired senior managers when irregularities were found at its consumer lending unit. La Polar’s board has agreed to file a preventative judicial agreement that requires support from creditors representing more than half the outstanding debt to be processed. Bondholders agreed June 20 on a waiver of covenants that allows the company to suspend pre-payments while stockholders approved on June 22 the sale of $200m in new shares.
Yearly Archives: 2011
LatAm Equities Fall
LatAm equity funds saw $98m in inflows for the week ending July 27, according to EPFR Global. EM equity funds, meanwhile, had $275m in inflows for the week. EM funds fell 0.36% for the week ending July 28, and are down 0.37% ytd, according to Lipper. LatAm funds also slipped 2.26% for the week, and remain negative 6.31% ytd. Global small and mid-cap funds also dipped 2.32% for the week, but remain up 2.41% ytd.
Politec Shareholders Get Different Multiples
Minority shareholders in Brazilian IT company Politec will receive a lower multiple than majority holders in exchange for selling their shares to Spanish tech company Indra. Politec, which had BRL400m ($256m) in revenues in 2010, has agreed to sell itself for BRL224m. Minority shareholders, who hold 6.57% of the company, will be bought out for BRL4.5m, implying an EV-to-sales multiple of 0.6x, to be paid at the closing of the deal. Majority shareholders, including the founders and Mitsubishi Corporation with an 8.77% stake, expect to receive a combined BRL219.5m in 2014, contingent upon the company reaching BRL1bn in revenues in 2013 (implying a CAGR of 22%) with a 9% EBIT margin, implying a 0.9x sales multiple. The buyout value for the majority shareholders is variable depending on variations in sales, EBIT margin and net debt load. Indra says it will also capitalize the acquisition with BRL100m.
Safra to Test Global BRL Market
Banco Safra is looking to return to the BRL Global market for a second time in just over a month amid talk that the recent imposition of an IOF tax on derivatives may encourage investors to further migrate to the offshore curve and help spur more issuance of this type. This deal is coming directly from the Brazilian bank as opposed to Europe-based issuer that tapped the market in June with a BRL400m Reg S only 10% 2015 (BBB minus) that was priced at 99.627 to yield 10.125% via BAML and Safra, according to bankers. Banco Safra SA, rated Baa2 and BBB minus by Moody’s and Fitch, is splitting into two teams to market the 144A/RegS Global BRL trade amid expectations of a 5-year tenor. Today the borrower will be in London and Chile, where pension funds have shown interest in such bonds, and it will wrap roadshows on Tuesday in Los Angeles and New York. This comes after much talk that several Brazilian issuers are looking to replicate the success of McDonald’s franchise Arcos Dorados’ BRL400m 5-year global (Ba2/BBB minus) bond earlier this year. Brazilian banks such as Bradesco, Banco do Brasil and BNDES are all heard contemplating such structures as well as other corporates such as steelmaker Usiminas and perhaps utility Cemig, which recently completed non-deal roadshows with Deutsche Bank. Being a utility with revenues in BRL tied to inflation, Cemig is thought to be an ideal candidate for an inflation-linked BRL bond, much like Banco Votorantim did earlier this year. Yet despite bankers’ effort to pitch inflation-linkers, it is questionable whether this structure will truly take off this year. Still with both the euro and the USD under pressure, bankers think that investors are more willing to take on the currency risk embedded in plain vanilla Global BRL trades, though the Brazilian government’s efforts to contain the strength of the BRL could counterbalance this trend however briefly. More likely, however, the authorities’ attempts to control the upward trajectory of
UPL Buys DVA Agro Brazil
Indian agrochemical company United Phosphorous (UPL) has acquired a 51% stake in DVA Agro do Brasil from DVA Group and other shareholders. The deal consists of a $150m cash component and the secondary purchase of shares from existing shareholders, though the target had revenues of $130m for the year ended December 31, 2010. UPL says the deal represents its second entry into the Brazilian crop protection market.
Colombia Expected to Hike Rate Today
Colombia’s central bank is expected to hike its rate by 25bp to 4.50% today, although Goldman Sachs says there is a moderate probability of a pause in the normalization cycle. The monetary policy committee was divided on its decision to hike the rate a month ago. Goldman cites currency appreciation and tolerable inflation dynamics as reasons behind a potential pause. Deutsche Bank says it expects the bank to keep the rate at 4.25%.
Elektra Crosses Finish Line
Mexican retailer Elektra put to bed its first international bond in over 10 years after printing a new $400m 7-year NC4 Thursday at 98.656 with a 7.25% coupon to yield 7.50%, in line with guidance and earlier investor expectations of a 7%-8% finish. Some accounts certainly wavered over a credit controlled by controversial Mexican magnate Ricardo Salinas, and the book size was heard to be modest, with some accounts hearing $500m plus on Thursday morning, but demand was sufficient to upsize the trade from an initial target of $350m and stick to 7.50% area guidance. Indeed, some 185 accounts were thought to have participated. “That’s not a bad tally – but I would wager a larger portion of fast money involved than you’d usually expect,” says a trader. .On the break, the bond slipped a touch to 98.50 bid, but like recently issued bonds from sister company TV Azteca, Elektra was expected to eventually perform relatively well after a less than perfect start. Interest payments fall on February 6 and August 6, starting next year. The bond carries a make-whole call of T+50 prior to August 6 2015 and is callable thereafter on August 6 at 103.625 in 2015, at 101.8125 in 2016 and at par in 2017 and thereafter. There is also an equity clawback for up to 35% of the bond at 107.25 before August 6 2015. Joint bookrunners were BCP Securities, Jefferies and UBS.
Folhapar to Make Offer for UOL
Brazilian media company Folhapar will make a tender offer for the minority shares of Brazilian internet access provider Universo Online with the intention of taking the company private. The public offering will be subject to approval by the CVM. The offering will be for 18,392,630 ordinary shares and 30,727,018 of preferred shares, representing 40.89% of UOL’s capital. Folhapar owns 60% of its total capital. The maximum price to be offered will be BRL17 per share. Universo went public in 2005.
GrupoSura’s Share Sale Seen Easing Ratings Pressure
Colombia’s Grupo de Inversiones Suramericana (GrupoSura) is targeting October for an up to $2.1bn equity follow-on to partially fund the recent acquisition of ING’s LatAm assets and to help it avoid any potential downgrade that could result from the purchase, say bankers. On Wednesday, the company’s bond dipped about a point after S&P put its BBB minus rating on negative watch. The agency said that incremental indebtedness from the transaction could hurt the company’s credit profile and that it would wait to see how GrupoSura planned to pay for the acquisition before acting further. “They don’t want to lose their investment-grade rating and they will do whatever they have to do to avoid getting a downgrade,” says a DCM banker familiar with the company. The conglomerate had in June approved the sale of up to 130m new shares, and now plans to raise $1.4bn-equivalent in the local markets and another $700m abroad. Banks could be named as soon as next week, according to an investor relations official. GrupoSura agreed this week to acquire the ING assets for EUR2.68bn ($3.9bn), consisting of EUR65m in assumed debt and EUR2.615bn in cash. It is putting up $500m in cash and can also tap credit lines it has with a pool of 6 international and 3 domestic banks. Bankers, however, think that the company will avoid leaning too much on bank debt in an effort to placate rating agencies. “They have a lot of financing options and they will go for whatever hits leverage ratios less and doesn’t compromise their ratings. Shorter-term bank financing will put a lot of pressure on their ratings,” the DCM banker says. The company official declines to disclose the group of banks or the terms on the credit facilities. GrupoSura also says it intends to combine the pension funds it bought this week with ones it owns already, placing them in a listed holding company at some point in the next few years. In addition to the assets purchased from ING, GrupoSura owns minority positions in Colombian c
Minerva Shrinks, Discounts to Finish Convert Deal
Minerva’s convertible debentures priced below the range, to raise BRL190m ($121.17m), less than the BRL300m it had targeted. In what was thought to be the Brazilian market’s first-ever public sale of mandatorily convertible debentures, the meatpacker shrunk the number of 2015 notes to 200,000 from 300,000, and priced below the 97-103 range at 95. The interest rate – 100% of DI – and conversion price range – BRL6.00-BRL8.00 – were established prior to bookbuilding. Shares closed at BRL5.39 Thursday. The deal was fortunate to get done, after leads extended the bookbuilding period by one day as demand sagged in markets around the globe. Most issuers of late, including Brazilian Copersucar, and Uruguay’s Union Agriculture Group, have had to cancel equity deals, and nobody else in the region has launched. ECM bankers expect a lull in the new issuance market, until there is more clarity on the US debt situation, the euro-zone debt problems and more stability is seen in Brazil’s domestic market. Though the equity pipeline has been healthy all year, the bankers report shrinking backlogs of yet-to-be-announced transactions. Minerva plans to use the proceeds to repay existing debt, and for working capital. Minerva is rated BBB minus on a national scale. Goldman Sachs, Deutsche Bank and Banco do Brasil were leads.