Category: Brazil

Pan-South American rental car agency Localiza has obtained a BRL300m 3-year credit line with the BNDES, according to Itau Securities. Neither the company nor the BNDES were available to confirm details on the financing, heard to be paying TJLP plus 450bp, say the shop’s analysts. The funds will help the company, which is based in Brazil, finance a BRL1.5bn 12-month capex program announced in June 2009, which includes the purchase of 52,575 cars.

Dubai-based marine terminal operator DP World has teamed up with Brazil’s Odebrecht to acquire a majority stake in Empresa Brasileira de Terminais Portuarios (Embraport), a new port being built next to Santos. The first $500m phase of the project in Sao Paulo state is scheduled to be concluded in 2012 with capacity to handle around 1m TEU and be operated by DP. At full development, Embraport is scheduled to have capacity of more than 1.5m TEU and about 2bn liters of ethanol, DP says, adding that road and rail links are already built. DP and Odebrecht do not reveal the price or size of the stake they are taking in Embraport, which they claim will be the largest Brazilian private multi-modal port terminal in the city of Santos. “This is an unparalleled opportunity to enter Latin America’s largest economy and establish a strong position on the east coast, building on the network we already have in the region,” says DP World CEO Mohammed Sharaf in a statement releases Sunday. The FI-FGTS investment fund of Caixa Economica Federal will maintain its participation, while Coimex Group, leader of the project since inception, cuts its stake, but remains a key member of the partnership. DP says Porto de Santos is the largest Brazilian container port, with 90% of its cargo destined for the Sao Paulo market. Odebrecht will increase the potential captive cargo, both cabotage and export, that can be handled through the project, while Coimex will aid with foreign trade and logistics. The deal – which Gulf-based press say is a first for DP in Brazil – marks the first such partnership for DP and Odebrecht Investiments. They have previously worked together on port construction, including container terminals in Callao, Peru and the terminal at Doraleh, Djibouti. DP last week announced a drop in H1 Ebitda to $535m from $652m in H108 amid a 10% drop in overall volume.

Gerdau will keep its BBB minus rating from Fitch, says the agency. The decision to keep a stable outlook on the investment grade rating is a small victory for the Brazilian steelmaker, whose executives scrambled earlier this year to avert a downgrade as its revenues tanked, forcing it to renegotiate debt covenants. The call affects $2.1bn in trade finance-backed debt, says the agency. A rapid deterioration in the outlook for global steel at the end of 2008 led to a drop in Gerdau’s revenues, which forced it to put capex on hold and tighten up its cost structure. S&P put the company’s BBB minus rating on negative watch in February and reaffirmed its rating review status in June, citing worrisome credit metrics and a weak outlook for the sector. Later that month, Gerdau said it had successfully renegotiated covenants on $3.7bn worth of loans at a cost to the company of up to $60m. “The ratings are . . . supported by the company swiftly adjusting its production output and cost structure to reflect the deteriorating market conditions since Q408 and ability to swiftly resume operations to meet the gradual increase in steel demand beginning to materialize at the end of Q209,” says Fitch in its note regarding the move Thursday. Bankers in the loan market also remark on Gerdau management’s proactive approach to preemptively renegotiating its debt ahead of a potential covenant trip.

Sabesp has filed to sell a BRL600m 2014 domestic bond to replace the 180-day commercial paper it raised earlier this year. The water utility expects to pay the DI rate plus up to 3.5%. Banco do Brasil is leading the transaction, which still must be approved by regulators. Sabesp is rated A+ on a national scale. The utility says it is also considering an additional debt offering at the end of the year or early next year, including a dollar bond, to help fund refinancing needs in 2010.

Vale, the Brazilian iron ore miner, says its Indonesian unit PT International Nickel Indonesia (PTI), has raised $91.4m equivalent in local currency by selling 205.7m shares on the domestic stock exchange. The move puts PTI’s public float at 20%, which one local executive says is a requirement for companies listed in Indonesia. “I am sure that Vale re-issued, as they say, to get the free float up consistent with local regulatory requirements, even though they don’t need the funds and would probably prefer to take PTI private,” says an executive in charge of a privately held Indonesian company. A Vale spokeswoman declines to comment.

Placas do Parana, the Brazilian unit of Chile’s Celulosa Arauco, has acquired all the shares of wood products manufacturer Tafisa Brasil, a Sonae Industria subsidiary, for about $227m. Of the total paid, Arauco says, $165m in cash was used to pay for the target’s shares, while the remainder represents the debt the buyer has assumed. The deal was privately negotiated.

The Concesao Metroviaria do Rio de Janeiro, which operates metro lines in the Brazilian city, will receive BRL423m from the BNDES to expand its network. The financing, understood to have a tenor close to 20 years, pays a spread over the TJLP plus a BNDES spread of around 1.00% and a credit spread of up to 3.57%, says a BNDES spokesman. The funds are being used to expand the transfers between 2 lines and increase the frequency of trains, according to a BNDES statement.

Brazilian regulators have approved a BRL398m CP issue from toll-road operator Ecorodovias Concessoes e Servicos. The 180-day notes are being issued at DI+4.5% in order to repay a previous CP issue. Itau is managing the sale.

Brazil state-controlled oil giant Petrobras says it is talking to privately-held ethanol company Brenco – as well as with others in the petrochemical and ethanol sectors – about potential partnerships. Petrobras says it is “in talks with Brenco to identify potential synergies in biofuel production.” However, it states that these conversations are preliminary and that no agreement has yet been signed. Brazil-based Brenco claims to produce 15% of Brazil’s ethanol and 4% of total world output.

Brazilian petrochemical giant Braskem is considering a “strategic business alliance” with Quattor, a petrochemical company owned 60% by Unipar and 40% by Petrobras. Quattor, which has a market cap of BRL1.7bn, specializes in resins. Itau says a purchase of Quattor by Braskem would be negative for the latter, given the expense and potential distraction a deal would cause for an entity that is looking to shore up its cost structure. The bank’s analysts note that an acquisition would not be in tune with the strategy Braskem executives outlined in a recent Q2 conference call. A purchase would increase debt, give rise to a need for Braskem to issue equity and potentially raise Petrobras’ stake in Braskem, says Itau. The last point is particularly worrisome, and also highlights a problem Braskem already faces, which is its dependence on Petrobras for raw materials. Since Petrobras is subject to political influence over pricing, that could also hurt Braskem’s productivity, says Itau. Brazilian boutique Estater is heard to be advising Unipar on the talks. “The company is constantly in touch with different companies in the pursuit of growth and partnership opportunities, as part of its internationalization strategy and its goal of becoming a global leader in the petrochemical industry,” says Braskem.