Category: Chile

Real estate private equity manager Equity International (EI) has sold back a 13.5% stake in Chile’s Parque Arauco, a shopping mall owner and operator, to Grupo Said for about $65m. The shop confirmed the deal but could not disclose more information regarding the sale. EI first bought a 12.5% stake in Parque Arauco in September 2006 for about $50m through a new share placement after it was asked by Grupo Said, the founder and primary shareholder of Parque Arauco, to provide growth capital and expertise to accelerate Parque Arauco’s expansion plans. This was its first investment in the southern cone country.

Chile technology company Sonda says it has made an offer to acquire 156.5m shares, a 100% stake, of Quintec. The potential buyer says it will pay CLP150 per share, or a total of CLP23.5bn in cash. Jorge Errazuriz, vice chairman of Celfin Capital confirms the shop is advising Sonda on the offer. Sonda says that a minimum of 125.2m shares, 80% of all shares, must be tendered for the deal to go through. The offer will be valid until August 8. On July 7, Quintec shares closed up 7.1% at CLP150. Sonda’s ended up 2.1% at CLP785.

Celfin Capital and Barclays expect Chile’s central bank to cut the monetary policy rate by 25bp to 0.5% July 9. “This [forecast] is in continuing reaction to the sharp slowdown in the Chilean economy, reflected by falling inflation readings – including months with deflation – since November 2008,” Celfin says. Annual inflation stood at 3.6% in June, according to the central bank. Barclays expects the cut to be the last one for the year, based on central bank minutes, which it says suggest 0.50% as a likely minimum for the policy rate, beyond which further rate cuts could create distortions. The consensus expects the rate to be increased to 1.5% by May 2010.

Chilean state-owned bank BancoEstado has sold $197m equivalent in inflation linked bonds on the domestic market. The UF5m ($197m) issue of 2019 bonds priced at 96.24 with a 3.50% coupon to yield 4.00%. Proceeds will be used to finance the bank’s expansion plans. BancoEstado’s own brokerage unit managed the transaction, rated AAA on a national scale.

Chilean oil producer ENAP has raised $300m in 10-year notes following a very brief roadshow in the US and in London. The deal, led by HSBC, Santander and BNP, was launched Tuesday morning and heard garnering $1.5bn in orders, which allowed the company to squeeze out tighter pricing. After indicating guidance of UST plus 300bp area, the A3/BBB/A rated issuer priced at 99.144 with a 6.250% coupon to yield 6.367%, or UST plus 287.5bp. Despite a ratings chop to BBB from A S&P this month, the quasi-sovereign appears to have benefitted from being an infrequent issuer – having last come to market 4 years ago – and from limited supply from LatAm in general. “There’s a scarcity value to Chilean corporate paper,” says an EM investor who participated. Bankers on the deal claim pricing was also favorable versus lower-rated comparables in the region, such as Pemex at 7% area. ENAP’s illiquid existing 2012s and 2014s make concession difficult to determine, say bankers away from the deal, who peg the pricing roughly 100bp wide of Codelco’s 2019s, which they deem acceptable. Some 100 accounts participated in the sale, with 45% based in the US and 43% in Europe. Buyers included a mix of high-grade and EM investors, including banks, private banks, insurance companies and fund managers. ENAP insisted on capping the deal at $300m, despite strong demand, say executives on the trade. The message it wants to send is that it is not increasing its net debt levels, and is in the process of trying to reduce leverage. Proceeds are for short-term debt repayment. ENAP recently raised $300m in bilateral loans from the same 3 banks that led yesterday’s bond, whose proceeds will also go to paying down short-term debt. The transactions fully address 2009 maturities, leaving a small amount to be paid in 2010. The company expects to cover this with its own internally generated cash, says a banker close to the issuer.

A $230m 7-year project loan for AES Campiche, a $500m Chilean hydropower project, is in limbo as the company grapples with the country’s environmental agency and supreme court, which have revoked a critical license. The loan was all but wrapped up when the issue arose within the past several weeks, says a banker on the deal. Banks have signed commitments for participation in the financing, being led by Calyon and Fortis, but it has not funded and will not do so until the issue is resolved. Campiche’s project financing (PF) was launched in February as a $445m 10-year loan, but was shrunken and shortened in April to $220m and 7-years. Pricing has remained unchanged at Libor plus 350bp stepping up to 400bp in year 7. Fitch has put AES Gener’s ratings on watch negative after the Chilean supreme court revoked environmental impact approval.

Fitch has placed AES Gener’s ratings on watch negative after the Chilean supreme court revoked an environmental impact approval for the $500m Campiche project. The approval was given in April 2008 and construction of the 537MW plant began a month later, but the court says the approval was based on improper zoning of the plant site, so AES Gener is suspending construction. “Given the strategic importance of this project to the Chilean energy matrix, the possibility that a solution is reached cannot be ruled out, but its timing and form remain highly uncertain,” Fitch says. It adds that suspension of the project could raise Gener’s operating and investment costs, pressuring credit quality. On the other hand, Fitch says the company does not have material debt maturities until 2014 and that its cash generation is expected to improve through 2010 as more favorable contracts kick in and the Nueva Ventana project starts. AES Campiche had been seeking a 7-year $220m loan to develop Campiche. The deal was offering 350bp-400bp over Libor.

Banco del Estado de Chile is planning to sell UF5m ($197m) in inflation-linked bonds Wednesday on the domestic market. The 2018 bond will pay a yield to be determined through an auction process. The bank’s own brokerage arm will manage the sale, rated AAA on a national scale.

Chile’s Ripley has sold $118m equivalent in inflation-indexed bonds on the domestic market. The retailer sold UF2m ($79m) in 2016 bonds at 97.97 with a 4.00% coupon to yield 4.45%, and UF1m in 2030 bonds at 99.55 with a 5% coupon to yield 5.04%. The tranches feature 3 and 10-year grace periods, respectively. Ripley elected not to issue CLP-denominated bonds available under the same program. It will use proceeds from the sale, rated A+/AA minus on a national scale, to refinance existing debt. IM Trust managed the transaction.

Spanish electricity giant Iberdrola says it is selling all of its hydroelectric generation assets in Chile to locally owned Cia. General de Electricidad (CGE) for $297.6m. The assets sold are Iberdrola’s 94.74% stake in Iberoamericana de Energia and a 55% stake in Empresa Electrica Lican. Iberdrola says the sale is part of its strategic plan, which calls for EUR2.5bn in divestitures this year. Tomas Gonzalez, senior equity analyst at Celfin Capital, says CGE is mostly focused on electricity distribution and has only recently diversified into electricity generation. Gonzalez explains that these newly acquired assets produce some 140MW. He adds that CGE is building another hydroelectric generation plant that should generate some 150MW. The analyst believes the price CGE paid for the assets is above market value, or about $2.1m per MW. “In larger assets the price usually paid is about $1m per MW,” he adds.