Mastellone Hermanos, owner of Argentina’s La Serenisima dairy brand, has hit an 80% acceptance rate for a $222.5m debt exchange offer expiring February 26. The threshold represents the minimum needed to make the exchange official without special legal permission. The dairy producer known in the bond markets as Masher is looking to exchange up to $222.5m in bonds and bank debt maturing 2011-2013 for new 2015 notes paying Libor plus 2.5% (capped at 6% all-in) and 2018s paying 7.0% initially, stepping up to 9.0% in 50bp annual increments starting January 2012. The swap will not reduce net debt. The offer launched December 10 has been extended twice. Bank of America-Merrill Lynch, hired in August to evaluate financial alternatives, is managing the process.
Category: Daily Brief
Peru Potash Project Gets Indian Financing
GrowMax Agri, a subsidiary of Canada’s Americas Petrogas, has obtained $500,000 in equity financing from the Indian Farmers Fertiliser Cooperative (IFFC), based in India. Funds will be invested in its potash brine project in Peru, says GrowMax. It adds that in return for the investment, it will issue 10m common shares at $1 each to IFFC. IFFC will get a board seat too. As a result of this financing, GrowMax now has 50m common shares outstanding, of which Americas owns 40m or 80% and IFFC owns 20%. This is not the first time the companies have worked together. IFFC had already made a $4.5m investment in GrowMaxi in late 2009. “In establishing this relationship with IFFC, GrowMax may also expand beyond Peru by considering projects and related business opportunities in other countries,” says Americas Petrogas president and CEO Barclay Hambrook. GrowMaxi had raised $9.5m in financing as of December 2009, he adds.
Fovissste Preps RMBS
Mexico’s Fovissste has filed for a MXP4.5bn UDI-denominated RMBS issuance. The government-owned lender has targeted March 24 to issue the 2039 fixed-rate bonds. Proceeds from the deal, its first of the year, will go to making new loans. Banorte, Ixe and Bank of America-Merrill Lynch are managing the sale, rated AAA on a national scale, with Goldman Sachs joining the trio as structuring agent. The lender paid 5.4% on a similar $5bn deal last year. Fovissste and fellow state-backed lender Infonavit propped up Mexico’s new issue RMBS market last year, and are expected to do so again in 2010. Infonavit’s first deal of the year, at MXP5.69bn, is set for March 10.
Drillship Bond Heads for Port
Grupo R’s RDS Ultra-Deepwater unit is expected to price a $260m bond this week, with investors expecting a yield north of 11%. The B3/B minus rated 2017 NC4 deal is scheduled to finish its US and European roadshow Tuesday. Proceeds go to purchase the nearly-completed PetroRig III drillship, eliminating construction risk. The asset also offers a long-term contract with Pemex, encouraging those considering the deal, though the need to secure financing by the end of this month for the purchase raises some concern. Following pushback in December, Grupo R reworked a plan to raise $463m in 5-year funds in the loan market via BBVA. The new structure involves a bond sale plus a 5-year loan, expected at $225m, on the same terms as planned earlier. This means paying Libor plus 375bp in the first 2 years, 400bp in years 3-4, and 425bp in the fifth year, with juicy up-front fees of 300bp. The bonds are subordinated to the loan and a new cash sweep feature for the latter has helped get lenders comfortable with the combo. Jeffries is managing the bond sale.
Falabella Sounds Out Bond Market
Chilean retailer Falabella may be considering a dollar bond transaction, investors say, after a day of meeting the New York buyside last week. The visit was not tied to any planned transaction, nor was it clear if Falabella would look to issue soon. Investors note that dollar issuance from Falabella would need to be sizeable to make it worth going outside Chilean domestic markets, where it is a frequent and well-established AA issuer. Deutsche Bank was managing the meetings, according to investors, though it is not clear if the bank has a specific mandate from the retailer. A Falabella finance official says there are no immediate plans for either dollar or local issuance.
Indian Refiner Takes Brazil Sugar Stake
Indian refiner Shree Renuka Sugars is continuing its expansion into Brazil through the acquisition of a majority stake in sugar/ethanol producer Grupo Equipav for BRL600m. Shree Renuka said Sunday it is buying at least 50.79% of the company, which had net debt of approximately BRL1.5bn at the end of 2009. The investment will fund mill capacity expansion, pay down debt and increase working capital. According to the buyer, Equipav consists of 2 large and modern sugar/ethanol mills with integrated co-generation facilities in Sao Paulo state that have combined cane-crushing capacity of 10.5m tons per annum. It also has co-generation capacity of 203MW. Shree Renuka plans to boost mill capacity to a combined 12.0m tons per annum and 295MW via capex of around BRL218m. Cane supply comes from cultivation of about 115,000 hectares of land, of which nearly Equipav farms two thirds. The mills also have easy access to the main ports of Santos and Paranagua, Shree Renuka adds. “Equipav has one of the biggest and most vertically integrated, modern operations in Brazil, with economies of scale and opportunities to form a cluster of contiguous mills,” says Shree Renuka MD Narendra Murkumbi. Equipav also has equity stakes in over 20 firms, with exposure to highway concessions, bus terminals, water and sewage, electricity generation, mortar production, waste management and maintenance of green areas. The deal is subject to approval of an acceptable debt-restructuring package by the lenders to the company and certain other conditions customary to such transactions. Closing is expected in 40 days. Itau BBA and Motilal Oswal were strategic and financial advisors to Shree Renuka. Veirano e Advogados Associados and Crawford Bayley provided legal support. Shree Renuka notes that Brazil is the largest producer and exporter of sugar, while India is the largest consumer of sugar in the world. The Indian company made it first Brazil investment last November, when it bought 100% of Vale Do Ivai,
No Changes Seen for Mexico Rates
Market consensus points to Mexico’s central bank leaving the monetary policy rate unchanged at 4.50% today. Morgan Stanley says that despite higher-than-expected January inflation of 1.09% month-over-month, the authority is likely to keep rates level. Credit Suisse says the bank will likely hike the overnight rate by a cumulative 100bp in late 2010, in four adjustments of 25bps each. Bank of America-Merrill Lynch believes any hike will come in the second half of the year.
Quintella Assumes Global Role at CS
Antonio Quintella, CEO of Credit Suisse’s Brazil business and head of the Sao Paulo-based investment bank, has been appointed co-head of a new EM council made up of 15-17 bankers, many of whom are heads of business lines, regions or one of 7 EM regions that include Mexico, Brazil, Middle East, Russia, India China and Indonesia. Quintella has been selected as a permanent co-head of the council alongside Russia CEO Fawzi Kyriakos-Saad. “The council will seek to increase transaction flows not only into EM but between EM countries,” Quintella tells LatinFinance, noting a pickup in south to south investment flows. He adds another main purpose will be to better connect the bank’s internal EM staff across regions, and help local market clients access the bank’s global EM network. Quintella will remain CEO of Brazil, but relinquishes stewardship of the investment bank. Jose Olympio, head of corporate finance for Brazil and Marcelo Kayath, head of equities, will become co-heads of the investment bank.
Ashmore Talks Up Brazil
Brazil will be a major investment destination for global investors over the next decade, Ashmore Investment Management says in a note, with the country benefitting from a rebalancing in the global economy. The shop, which manages over $30bn in mostly EM and has large positions in LatAm and Brazil, expects continued increases in allocation to asset classes outside money markets, particularly into the equity market, which more and more of the country’s companies have been turning to for funds. “We’re also seeing strong opportunities in the fixed income market with high rates and a steep curve plus the likelihood of currency appreciation due to strong foreign direct investment and portfolio investments over the next 10 years. Money will follow growth,” says Ashmore Brasil CEO Eduardo Lopes. “As this new reality of global risks changes, so asset allocators are starting to realize they are massively underweight Brazil and other emerging markets,” chimes in Jerome Booth, Ashmore’s head of research, noting that the US and Europe are no longer the safe havens they were thought to be.
Interbolsa Plans Bond Sale
Colombian investment bank Interbolsa says it is planning to issue COP120bn ($62m) in local bonds in late March or early April. The AA+ rated issue will have a 4-year term and be made in 3 series, one paying a spread over IPC, another over DTF and another one paying a fixed rate. The company says proceeds will be used to refinance debt and to finance its acquisition of Brasil’s Finabank, which it bought for BRL36.3m in November, and other investments. Esfinanzas is managing the issue.