Category: Brazil

Japan Tobacco says it has agreed to acquire Brazil-based companies Kannenberg & Cia and Kannenberg, Barker, Hail & Cotton for about $230m. The buyer says it will pay with cash on hand and loan facilities. It does not disclose advisors. The deal is expected to close by October. Japan Tobacco explains the acquisition is intended to globalize its scope of procurement capability by adding Brazil, which it adds is second only to China in tobacco leaf production worldwide.

Brazil’s Eletrobras has given 7.25% area yield guidance for its new 2019 bond, following conclusion of a US and European roadshow Wednesday. There has been no official size given for the “benchmark” sized bond, though investors tell LatinFinance they expect $1bn. Credit Suisse is managing the sale, rated BBB minus.

Brazil’s B2W Companhia Global, operator of online retailer Submarino, has signed a BRL154m loan with the BNDES, it says. B2W does not disclose the interest rate, term or use of proceeds. The company declines to discuss details of the loan, citing a quiet period ahead of reporting Q2 results.

HSBC now expects the BRL to end the year at BRL2.23 per USD, assuming economic variables remain constant. In March, it expected it to end at BRL2.45 per USD. The shop says that the recent appreciation of the BRL makes it slightly overvalued compared to the USD. On July 21, BRL closed at BRL1.90 per USD.

Goldman Sachs, in agreement with market consensus, forecasts that Brazil’s central bank, Copom, will cut the monetary policy rate by 50bp to 8.75% today and believes the decision will be unanimous. However, it expects a brief statement by Copom to leave the door open for a 25bp easing in September. Bulltick Capital agrees with the 50bp reduction, and with one more 25bp cut before the end of the year, leaving the rate at 8.5%. JPMorgan also forecasts a 50bp cut this month, but different from the other shops, believes this will be the last easing of the year.

Poultry processing giant Brasil Foods has priced a follow-on equity offering at BRL40.00, a 1.45% discount to the Tuesday closing price of BRL40.59. In selling the 115m shares, Brasil Foods, the product of the stressed acquisition of Sadia by Perdigao, raised some BRL4.6bn, and could see another BRL690m raised if underwriters succeed in placing a 15% greenshoe. The deal was apparently oversubscribed, though not by a large amount, according to investors. Bankers on it say the book has been covered many times for a week. Roughly half the funds raised yesterday were already allocated to existing investors who had priority rights, says a banker on the transaction. The deal pleased some buyers. “This stock is worth BRL60.00 if not more,” says Adalmario Couto, portfolio manager at New York-based MC Capital Group, which manages $450m. His estimate is based on the expectation the company will trade at a multiple of around 10x by the end of 2010, in line with other global producers of processed and frozen foods like France’s Danone. “This is one of, if not the lowest cost and largest animal protein producers in the world,” says a banker close to the company, adding that investor interest in the deal was never in question.

Brazil’s Odebrecht, which has spent a good part of the year haggling with lenders over pricing on a $1.3bn project loan, is making a dash for the finish line on the financing, and is even heard to have achieved $150m oversubscription. The transaction – which will not be upsized – is 80% funded with debt from commercial and development banks. It is being raised for the construction and operation of 2 twin deepwater drilling platforms for Petrobras. After a necessary 40bp flex on pricing, which left the 10-year deal starting at 340bp over Libor and rising to 415bp in year 10, lenders acquiesced and the commitment process gained some momentum. Holding tickets of $100m or more are Santander, SocGen, BNP, Calyon, BES and HSBC. Banco do Brasil (BdB) is expected to join this week, also with a $100m commitment. Fees for tickets of $100m and up stand around 275bp, with the average fee for the whole facility in the 250bp area. Portugal’s Caixa Geral de Depositos, France’s CIC, Norway’s NIBC, as well as ING, HSBC and WestLB also joined with tickets of $50m and $75m, says an executive on the transaction. A financial close is targeted for July 31, though delays that have characterized most every live transaction could push that into August. The approximately $900m commercial portion is a 10 year, while the remaining ECA funding is for 12 years. Giek, the Norway-based ECA, provided alongside compatriot Export Finance, $270m in direct funding. Korea’s Kexim came in with $155m in direct funding and $145m in guarantees, says an executive on it. Odebrecht is providing $300m in equity financing on the deal.

Brazil’s Auriemo family has sold part of its stake in Diagnosticos da America, the company says. The Auriemos sold 6m common shares, or 10.45% of the outstanding float, in the medical services provider, for an undisclosed amount via an auction on the Sao Paulo stock exchange. The transaction leaves the Auriemos with less than 5% of the company, which was first publicly listed in 2004. Dasa shares opened Friday at BRL37.25, and closed at BRL36.86, implying a value of BRL221.1m-BRL223.5m for the 6m share stake. Caio Auriemo stepped down as Dasa’s chairman in 2005 after a 35-year tenure at the company and its predecessor.

Brazilian miner Vale says it is not seeking to buy fertilizer assets, following local press reports last week suggesting it was readying a $25bn bid for US-based fertilizer company Mosaic. “As previously indicated, the expansion of activities in the fertilizer industry is one of its strategic objectives,” says Vale. “To accomplish our goals, we have a wealth of organic growth options, which are strategic priorities and have high expected rates of return, superior to those presented by eventual investments in the acquisition of companies.” It plans to continue developing existing fertilizer assets including projects in Brazil, Argentina, Mozambique and Canada. “The implementation of these projects will turn Vale to be one of the leading global producers of potash, with an estimated production of more than 12m metric tons per year,” says Vale. Analysts and bankers following the Brazilian miner were mostly bewildered by unsourced local press reports suggesting it was preparing the $25bn bid. Vale is fresh off a series of conference calls and meetings with investors related to a convertible, at which it clearly stated that it is not pursuing big ticket M&A. Vale officials said the company evaluates all opportunities, but there was nothing major on the table to speak of. Gilberto Cardoso, analyst at Banif-Ixe notes that for an extra $10bn, Vale could acquire Anglo American, a far more attractive asset in terms of scale and diversification metrics. “Given our strong financial position and clear growth strategy, which is being implemented through substantial investments in recent years, totaling $51.7bn from 2004 to March 2009, Vale is a natural target of rumors and speculations about the acquisition of mining companies,” says Vale. “In this context, Vale is frequently approached by financial institutions seeking to offer acquisition opportunities of fertilizer producing companies.”

Brazilian airline TAM says its wholly owned subsidiary TAM Linhas Aereas will make its first public issuance, of BRL600m in 2013 notes. The sale date is July 24 and the bonds are guaranteed by fiduciary assignment of receivables and by an additional surety guarantee. The deal amortizes in 13 quarterly and consecutive payments, to be made the 24th day of the months of January, April, July and October of each year, with the first payment due on July 24 2010. Planner is the fiduciary agent, while BB Banco de Investimento is lead coordinator and Bradesco is a designated issuance bank. Proceeds are for working capital.