Category: Brazil

UK based mining company Rio Tinto is planning to invest $2.5bn in a major expansion of its Corumba iron ore mine in Brazil. The work will boost mine capacity to 12.8m tons from 2m tons, Rio Tinto says, with new production expected to start in Q4 2010. The Corumba investment brings to nearly $11bn the total capex Rio Tinto has committed since 2003 to develop its iron ore business, the company states. Rio Tinto will also undertake a feasibility study, to be completed by mid 2009, for a phase II expansion that would take capacity to 23.2m tons per year, the company adds. The expansion of Corumba is designed to capitalize on increased demand for iron ore in South America and the Middle East.

Revlon has sold its Bozzano brand, a men’s hair care and shaving line of products, and certain other non-core Brazilian brands to Hypermarcas for approximately $104m in cash. The transaction was effected through the sale of Brazilian subsidiary Ceil Comercio E Distribuidora. Revlon says its brand color cosmetics will continue to be marketed in Brazil through a third party distributor.

Banco do Brasil and South Africa’s FirstRand are creating a new financial institution to focus on car loans in Brazil. The Brazilian bank plans to invest BRL980m in the new venture that is expected to start operations in the first half of 2009. BdB will own 73.5% of the new institution and FirstRand the rest, according to BdB. The Brazilian bank expects the new venture to control a 20% share of the Brazilian car loan market in 8 years, it says.

The BNDESPar unit of Brazilian development bank BNDES has suspended for up to 60 days its issue of BRL1.5bn in 2010 debentures. It has decided to wait due to the volatility in the capital markets, according a BNDES official. The notes rated AAA on a national scale are part of a BRL6bn program. The bank had not yet indicated the rate it expects to pay. Banco do Brasil is managing the operation, with Bradesco and Caixa Economica Federal co-managers.

Brazilian regulators have approved developer Trisul’s issue of BRL200m in 2013 debentures. The notes, rated A on a national scale, pay interest at the DI rate plus 2.5%. The offer marks the debut debenture issue for Trisul, formed from the merger of real estate companies Tricury and Incosul. The developer plans to use proceeds to acquire new property and for working capital. Bradesco is managing the transaction. Separately, regulators also approved a BRL300m 2013 debenture issue from fellow developer MRV. The issuer plans to define the rate on the AA minus notes this week. The transaction is the first debenture sale for MRV, led by Itau. It plans to acquire new property with the proceeds.

Brazil is planning to spend BRL3.89bn through 2010 on revamping its airports in preparation for the 2014 soccer World Cup. A significant amount of the money will be spent overhauling the airports of Sao Paulo and Rio de Janeiro, according to state airport management agency Infraero. “In a race against time, Infraero is making sure that the 67 airports in its network are in perfect condition and can welcome in comfort and security passengers in Brazil and from abroad,” it adds. Some 12 Brazilian cities and towns will be hosting World Cup matches.

Brazil’s Companhia de Concessoes Rodoviarias (CCR) is assembling an elaborate financing package to support estimated BRL2.5bn investment to operate RodoAnel, a 32km ring road around the city of Sao Paulo, say executives close to the process. The financing includes three basic stages, the second of which involves a project loan – whose structure is similar to what was used in the $3.7bn Farac I deal in Mexico – and would be a novelty for Brazil. The first stage relies on short-term bank lines. UBS Pactual underwrote a BRL650m 1-year bridge loan to CCR RodoAnel, the private concessionaire, at CDI plus 125bp. In May, the borrower syndicated BRL350m of the line by issuing promissory notes to four banks including SocGen, ABC Brasil and Banco Alfa, and will in the coming month begin syndicating the remaining BRL300m. CCR has also tapped Santander and Bradesco for a BRL600m bridge at a rate of CDI plus 100bp-110bp, says an executive involved. A second stage, still being finalized, will include a roughly $200m IDB A loan, and a $700m 7-year bullet B loan, called a mini-perm, which carries a cash sweep. Pricing on the B tranche, to be led and syndicated by Depfa, could come in a Libor plus 140bp-200bp range, says the official. The mini-perm, extendable by 8 years, will be used to take out the BRL bridge loans. A BRL hedge may also be put in place since the dollar liability would be paid down with BRL revenues. A third stage involves issuing local and or international bonds to take out the mini-perm. CCR won a concession for the RodoAnel in March. It was also among the bidders for Farac I last year in a group with Portugal’s Brisa, Mexico’s La Nacional and Merrill Lynch, heard to have offered a $3.3bn 26-year bond to finance the concession.

Brazil’s Parana Banco has concluded a roadshow supporting its issue of $50m in 7.75% of 2011 bonds and expects to close books by early next week. The payroll discount lending specialist has set 7.875% area guidance on the B+ offer. Size was reduced earlier this month from an originally planned $100m. Queluz Securities claims to be the sole bank managing the sale, despite the issuer’s original indication that Dresdner would also be involved.

Online retailer B2W has started the sale of BRL364m in 2013 debentures, paying interest at the DI rate plus 2%. Proceeds from the A rated sale will repay short-term debt and finance investments in logistics and technology. Unibanco is managing the transaction. B2W is the result of a merger between Brazilian retailers Submarino and Lojas Americanas.

Brazil’s Infinity Bio-Energy has agreed to buy an ethanol production facility from Brasil Energia Renovavel Participacoes for $100m in Infinity shares and assumed debt. The Destilaria Guaricanga in Sao Paulo state will add an immediate installed current crushing capacity of 1.2m tons of sugarcane to Infinity’s current crushing capacity of about 9.5m tons representing an increase of more than 12% percent. Closing is expected by September. Guaricanga had gross assets as of end-2007 of approximately $205m and recorded a net loss last year of approximately $3.5m.