Brazilian travel operator Brasil Travel Turismo e Participacoes has filed with local regulators to carry out an IPO. Brasil Travel is a holdco for 35 companies involved in businesses such as travel agencies, foreign exchange, travel insurance, and tour operations. The company is headed by Paulo Castello Branco, a former VP of Brazilian airline TAM, and chaired by co-founder and ex-BTG Pactual partner Pedro Guimaraes. It has not yet indicated the number of primary and secondary shares to be sold, but it is expected to target a size of about BRL500m ($275m). The secondary shares are to be sold by the founders’ vehicle, owned by Guimaraes, the Sette family and Jose Marcilio Nunes. Brasil Travel plans to use the primary proceeds to grow in Brazil and in other countries in LatAm, with about 85% of the funds to be spent on acquisitions. The issuer was formed in March and comprises companies spread throughout Brazil, which together posted BRL137m in Ebitda in 2010. Barclays, Credit Suisse and Flow Corretora are managing the sale. No Brazilian company has issued an IPO since July, and investors are skeptical that such deals can happen before April 2012. Market conditions still need to improve and a few large follow-ons should first test appetite early next year before any IPO issuance can take place, they say. Fellow tourism operator CVC is also among the many Brazilians preparing an IPO.
Yearly Archives: 2011
Cemex Comfortable with Covenants
With a sooner-than-expected windfall from the Venezuelan government and a steady reduction of bank debt, Cemex feels comfortable meeting loan covenants going into the first half of next year, though this may be a different story as leverage ratios become more stringent by the end of 2012. “We have said we are highly confident that we will meet our year end [2011] covenants. If you take a look at our operating cash flow there is little question we will not do it,” says Maher Al-Haffar, vice president of public affairs and investor relations at Cemex. This comes as the borrower continues to contemplate ways to access the capital markets to cover a $6.7bn debt payment in 2014, wean itself off bank debt, and generally “de-risk” its balance sheet. “Bond holders will become more important,” says Al-Haffar. Fortunately for the cement company, it has some breathing space ahead of its 2014 payments at time when markets are still largely closed to high-yield names like Cemex. But this doesn’t mean that it will not take a proactive approach to capital market forays. “We have a track record at Cemex of being extremely anticipatory, and we know these things are not to be taken lightly,” he says. The company is poised to receive a sooner-than-expected windfall from the Venezuelan government, which has agreed to pay $600m equivalent as compensation for the assets taken in a nationalization campaign in 2008. Venezuela will make an initial payment of $240m in cash and $360m in securities issued by state-owned oil company PDVSA. Payment is expected anytime up to until December 12, after which time the company will clarify details about the PDVSA securities and what it intends to do with the proceeds. Al-Haffar indicated that proceeds could in theory be used to pay down debt and hence lower the amount of growth required to comply with covenants that call for leverage ratios of 6.5x by June 2012. Going forward, however, it may be a struggle to reach the 5.75x threshold set for the end
HRT Settles Call Option Deal
Brazil’s HRT Participacoes em Petroleo has agreed to pay BRL1.3bn ($711m) to Petra Energia as part of a call option to acquire a 45% stake in concession rights over 21 oil blocks located in Brazil’s Solimoes Basin. HRT is expected to pay the total amount in 5 installments of equal amounts over a period of 2 years. The first payment will be due within 5 days after Brazilian regulators approve Petra’s transaction with HRT, with the rest to be paid after the regulator also authorizes the concession rights to TNK-BP. Last month, the Anglo-Russian TNK-BP paid HRT $1bn to acquire the 45% stake in the Solimoes Basin concession. When all is done, Petra will have a right to 50% of the difference between HRT’s call option payment to Petra ($711m) and what HRT received from TNK-BP ($1bn). HRT is expected to remain the project operator even after TNK-BP officially acquires the 45% stake in Solimoes. A spokesman said HRT retained Goldman Sachs for its dealings with TNK-NP but he would not disclose who advised the company in its call option with Petra. In a separate deal late last month, BlackRock said it had managed to accumulate a 5.15% stake in HRT, valued at the time at BRL177m ($94m), using a BRL590 per share estimate. In recent years, investors and foreign oil companies, particularly Chinese energy companies, have flocked to Brazil’s energy sector eager to carve out a foothold in Latin America’s most promising new oil frontier.
Infonavit Prices MXP RMBS
Mexico’s Infonavit has issued MXP1.1bn ($82m) of RMBSs backed by Infonavit mortgages in the domestic market. The state mortgage lender locked in its lowest coupon this year, with a UDI-denominated 2039 that was priced at 4.45%, inside talk of 4.50%, or 264bp over the government’s UDIbonos. The transaction was heard 1.7x oversubscribed after over 40 accounts participated, including private banking clients, insurance companies, investment funds, pension funds and bank treasuries. Proceeds will be used to create new mortgages. Banamex managed the sale, rated AAA on a local scale. Infonavit plans to issue a third RMBS under its MXP6bn program in February 2012 through Banamex and HSBC.
MPX Eligible for BNDES Financing
MPX Energia has taken steps toward securing BRL1.6bn ($880m) in BNDES financing for its Parnaíba Thermoelectric Complex. The project is expected to be funded with about 70% debt and 30% equity, with total investment for constructing 3 facilities expected at about BRL2.3bn. Though MPX is now eligible for the financing, final terms remain subject to approval by BNDES’ credit committee and board of directors. In June, the Brazilian power generation subsidiary of Eike Batista’s EBX family of companies announced it had acquired two power projects from Bertin. MPX does not disclose the value of the acquisition, but says the two projects generate combined revenues of BRL323.8m.
PDVSA and Rosneft Ink Heavy Oil JV
PDVSA has signed a memorandum of understanding with Russia’s Rosneft on a deal to develop the Carabobo 2 oil project, one of three heavy oil projects planned by President Hugo Chavez. Rosneft will take a 40% stake in the joint venture and 60% will remain in the hands of PDVSA, in line with the 2 other ventures signed with foreign oil companies, Rosneft said in a statement. Company officials at Rosneft and PDVSA could not immediately be reached for comment. The deal would give Rosneft a stake in the development of the Carabobo 2 North and Carabobo 4 West blocks, estimated to hold 40bn barrels of crude and a hand in the creation of a crude upgrading plant to turn heavy oil into a more marketable crude. Once online, the fields are expected to produce up to 400,000 barrels of crude a day and the oil upgrading plants should offer a 200,000 barrel a day processing capacity. As agreed, Rosneft will pay $440m upon congressional approval of the deal, and $660m more once the final investment decision is made with PDVSA. The Russian oil company will also make available to PDVSA a $1.5bn credit facility, with disbursements capped at $300m a year. The two companies also signed additional agreements for joint ventures that will offer drilling and construction services to the heavy oil ventures. Global oil players such as the US’s Chevron, Spain’s Repsol and Malaysia’s Petronas have secured spots in the Orinoco oil ventures hoping to gain a place at the table in one of the richest pieces of oil real estate in the world. Venezuela holds one of the world’s largest reserves of heavy oil.
Petrotemex Closes Loan Amendment
Mexican petrochemical company Petrotemex has closed an amendment to its $600m loan after watching several European and Chilean banks decline to participate, and BBVA joining as a newcomer. Originally used to finance the company’s acquisition of Eastman Chemical’s PET business in the US, the facility keeps the original pricing structure, but changes from a 3-year bullet into a 5-year amortizer. The 5-year will require a $125m payment in 2013, $75m in 2014, $200m in 2015 and $200 in 2016, all in quarterly payments, with a smaller amortization in 2014 when the company has a bond maturing.
Spain’s BBVA joined the facility, while Credit Agricole, RBS, Banco de Chile and BCI dropped out. Existing bankers were paid upfront fees of 65bp, while new money entrants got 85bp. The amendment still paysLibor+300bp out of the box and was 10% oversubscribed. On the original transaction, Inbursa, Santander, ING, Credit Agricole and Bancomext came in as MLAs, while Scotia, Banco de Chile, Banorte and Bank of America participated as arrangers. Bank of Tokyo Mitsubishi, Bladex, Mizuho and Wells Fargo had been committed as managers. Credit Suisse and HSBC led the amendment.
Urbi Builds Local Issue
Urbi Desarrollos Urbanos has sold MXP600m ($44m) in Mexico’s domestic bond market. The homebuilder’s floating-rate bonds were priced at TIIE+400bp, wide to the TIIE+370bp-380bp expectations. The book size was heard at MXP700m with around 50% participation coming from institutional investors. Proceeds will be used to refinance existing long-term and short-term debt.. BBVA Bancomer managed the sale, rated A3 on a national scale. Urbi last visited the bond markets January 2010, issuing $300m in a cross-border sale.
Canadian Buys Brazilian Auto Parts Operation
Cosma, a unit of Canada’s Magna International, has agreed to purchase the Brazilian auto parts unit of ThyssenKrupp Automotive Systems, further cementing its presence in LatAm. Officials at Cosma and ThyssenKrupp decline to discuss the transaction amount or its valuation metrics. Cosma is a manufacturer of automotive metal body structures, as well as other components and parts for vehicle chassis. ThyssenKrupp’s four Brazilian production plants generated sales of approximately $250m in the fiscal year to September 30, Magna says. Pawel McNicol, managing director of Cosma says that the deal was done with no financial advisors for either party. On the legal front, however, Cosma did retain the services of Pinheiro Neto Advogados, while ThyssenKrupp was advised by Lobo & de Rizzo. Magna currently owns 9 production plants and two research centers in South America.
Urbi Poised for Local Bond Sale
Urbi Desarrollos Urbanos (URBI) is expected to price up to MXP1bn ($74m) today in the Mexican domestic bond market. Price talk for the Mexican homebuilder has widened out to TIIE+370bp-380bp area, from an earlier indications of TIIE+350bp. Proceeds will be used to refinance existing long-term and short-term debt. With the proposed issuance, Urbi will have no substantial debt maturities until 2014, says Moody’s, which rates the deal A3 on a national scale. BBVA is managing the sale. Urbi last visited the bond markets in January 2010, issuing $300m in a cross-border sale.