Category: Brazil

Brazilian steelmaker CSN has launched an unsolicited $5.57bn bid for Portugal-based cement company Cimentos de Portugal (Cimpor). The price is EUR5.75 per share, a 5% premium to Thursday’s close, plus the assumption of $2.51bn in debt, bringing the total deal value to $8.08bn equivalent, according to the bidder. CSN closed 5.7% lower Friday and was blamed for overall weakness in Brazilian stocks. Cimpor meanwhile ended at EUR6.34, up almost 1.0% from the previous day’s close. CSN says the acquisition is in line with its diversification and internationalization strategy. CSN also says it may use part of its available cash and/or finance part or all of the acquisition with lines from what it calls “first-tier” banks, whose names it does not reveal. Banco Espirito Santo de Investimento advised CSN, which says it will work with Cimpor management to get a deal done. The transaction is subject to regulatory approvals and more than 50% acceptance by shareholders. It could also prompt counterbids form other LatAm names like Votorantim, Camargo Correa or even Cemex, which has just emerged from a messy restructuring. S&P put CSN’s BB+ rating on credit watch with negative implications pending an assessment of how the deal’s price might affect the financial profile. The agency notes that CSN’s significant cash position mitigates refinancing risks of its substantial gross debt. “Management’s fast downward adjustment in production in response to weaker operating conditions has helped the company protect its credit measures and maintain adequate profitability,” says S&P. It also put Cimpor on watch negative. In 2008, Cimpor recorded revenue of EUR2.1bn, net income of EUR219m and Ebitda of EUR586m, says CSN. Net debt on September 30 was EUR1.8bn. Cimpor has presence in 13 countries and around 60% of revenue from EM and has also been seeking to expand via acquisition in South America. In October it launched an offer for Ecuador’s Cementos Chimborazo, but the offer was rejected a mo

Brazil’s Metalfrio Solutions is planning to sell at least 31m shares through a primary and secondary offer. Such a sale would give proceeds of BRL301m based on its closing price of BRL9.72 Thursday. The maker of commercial refrigerators and freezers plans to sell 17m shares through a primary offer and 14m through a secondary offer, plus an extra allotment of shares if demand is sufficient. Metalfrio does not give a target date for the sale, which still must be approved by regulators. Credit Suisse, Itau and Morgan Stanley are managing the sale.

Brazilian real estate company Inpar has requested from regulators authorization to sell additional shares, it says. Inpar did not state how much it plans to raise or give the timing, noting that both would depend on market conditions. The developer focused on the residential and tourism sectors raised BRL756m in a 2007 IPO.

Brazilian homebuilder Rodobens Negocios Imobiliarios palns to issue BRL100m in promissory notes, it says. The 360-day paper pays 113% of DI. Bradesco is coordinating the transaction, which will generate resources for working capital. It is the first CP issuance for Rodobens, which raised BRL448m in a 2007 IPO via JPMorgan.

BNDESPar has closed its BRL1.25bn domestic bond sale, following final regulatory approval. The investment arm of the BNDES development bank has sold a BRL640m 2013 tranche pays a fixed rate of 12.750%, while a BRL610m 2015 tranche pays the IPCA index plus 7.078%. The prices for the two series were set by offering a 0.3% premium to the DI rate and 2015 NTN-B floating-rate government bond, respectively, according to regulatory documents. Banco do Brasil managed the sale, rated Aaa on a national scale. The company initially targeted a BRL1bn sale.

As anticipated, Brazil increased its 2019 bond retap to $525m through the sale of a $25m greenshoe to Asian investors. Brazil sold $500m Tuesday, retapping the 5.875% coupon bond for the second time this year, at 108.204 to score a rock-bottom yield of 4.75%, or UST plus 114bp. Goldman Sachs and Morgan Stanley managed the sale, rated Baa3/BBB minus. The total amount outstanding now stands at $2.3bn.

With the Brazilian energy sector charged up from a seemingly favorable result in Monday’s wind power auction, sponsors are calling for better government support and long term commitment to wind power. “It’s very important for all participants in the wind power sector to know if this is a long term business in Brazil,” says Horacio Carvalho, CEO of Aeolus Wind, the London-headquartered wind development company whose main operations are in Brazil. He was speaking at a conference in Sao Paulo in the third week of November, prior to the auction. “We should have a clear understanding that if these auctions are [going to be held] every year, or if there’s a ceiling for installed wind capacity that the country wants to have,” he adds. The rules of the game need to be clear so that banks, investors and other market participants can have confidence to invest in Brazil, he concludes. As with hydro, load factor is a critical issue. Wind farms can only produce while there is wind, which produces a high degree of volatility in output. “We need to have a mechanism that covers the volatility of the production of wind farms,” says Monica Neves Cordeiro, head of business development at Cemig, who also participated in the event. She calls for a clear economic signal of support from the government to protect and support wind generation. Load factors for many projects in the north of Brazil top 50%, says a project banker, while some of the better known proposals for projects in the south of Brazil hover in the 30% area. Luis Pescarmona, CEO of IMPSA Wind, which produces turbines in Brazil, says that if Brazil hopes to draw direct investment from international equipment producers in the coming years, it has to provide substantial fiscal incentives. “Even if Brazil [is auctioning] 1.0GW-1.5GW per year, it is not a large market,” says Pescarmona. “The big market in the world today is China,” he notes, adding if the government chooses to promote local production by taxing the importation o

BNDESPar has completed the bookbuilding process for its domestic bond sale, setting the terms on a BRL1.25bn transaction that is set to close, following final regulatory approval. The investment arm of the BNDES development bank is issuing the amount across two tranches. A BRL640m 2013 tranche pays a fixed rate of 12.750%, while a BRL610m 2015 tranche pays the IPCA index plus 7.078%, according to regulatory documents. Banco do Brasil is managing the sale, rated Aaa on a national scale.

Brazilian real estate company Brookfield Incorporacoes has launched a road show supporting its BRL300m debenture issue, it says. Presentations will last through Friday, according to regulatory documents. The developer may upsize to BRL450m on demand, and plans to divide the issue into a 2014 paying DI plus up to 2.2%, and a 2016 piece paying a fixed rate of up to 9.5%. Santander is managing the sale, rated A+ on a national scale.

Brazilian paper and pulp producer Suzano says it has sold 50,000 hectares of forestry assets to two local vehicles. The deal is worth BRL311m, says the country’s second largest paper and pulp producer in a statement with the CVM. The move is part of a strategy to manage resources and reallocate capital to efficiently execute its growth strategy, says Suzano. The assets are located in the state of Minas Gerais and other southern Brazilian states. “The deal is positive for Suzano,” evaluates Credit Suisse. “Based on a replacement value analysis, these forestry assets could be valued at around BRL175mn. Thus, this would imply a premium of close to 80% to replacement value, or as much as 2% of Suzano’s current market cap,” it concludes.