Chile’s outgoing president Michelle Bachelet has named a new board of directors at state-owned copper producer Codelco. The new board, to be chaired by current board member Nicolas Majiluf, will take office March 1. It will be responsible for choosing a CEO to succeed Jose Pablo Arellano, who has said he will not continue beyond March. The board includes former national budget director Alberto Arenas, former Codelco CEO Marcos Lima, Andres Sanfuentes and Marcos Buchi. Arenas, Sanfuentes and Majiluf will be on the board until May 11 this year, while Lima and Buchi will remain there until May 2011.
Category: Daily Brief
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Chile Rates to Stay Put
Chile’s central bank is seen keeping its monetary policy rate at 0.5% today and is not expected to hike it until at least 2Q, say Morgan Stanley and Barclays, in line with market consensus. “Although the central bank is likely to maintain the language regarding the stability of the policy rate at 0.5% until ‘at least Q2,’ it will probably at least highlight the recent peso depreciation in the accompanying statement,” Barclays says. The CLP has depreciated to CLP550 per USD on February 10 from CLP535 per USD February 1. Morgan Stanley believes that the ongoing economic recovery remains on track and broadly in line with the central bank’s base scenario. Although base effects should push annual inflation into positive territory as early as this month, it says price pressures remain largely muted. It forecasts annual inflation will reach 2.6% by the end of 2010, from a contraction of 1.4% at the end of 2009.
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Moody’s Cuts Industrial Sub Debt
Moody’s has lowered Banco Industrial’s foreign currency subordinated debt rating to B1 from Ba3. The outlook is stable. The action affects $35m on non-cumulative step-up Tier 1 capital notes issued by the Guatemalan bank. Moody’s explains that key features of the notes driving the rating outcome are a 60-year maturity, non-cumulative coupon skip mechanism, and deep subordination in liquidation. Coupon skip features include optional and mandatory cancellation of interest, the latter based on regulatory triggers. In the event of Industrial’s bankruptcy, liquidation, or dissolution under Guatemalan law, the notes will rank junior to all senior and subordinated debt, pari passu with the most junior subordinated debt and preferred stock, and senior only in priority to holders of common stock. All other Industrial ratings are unaffected by the downgrade, which is the result of a review initiated November 18. As of December 31, Industrial was the largest bank in Guatemala, with $5.5bn in assets and $490m in equity.
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Alto Parana on CreditWatch Negative
S&P has put Argentine forest company Alto Parana’s BB minus rating on credit watch with negative implications after tax authority Tribunal Fiscal de la Nacion (TFN) notified it of an adverse ruling on a tax claim. The total amount of the claim, regarding certain income tax deductions on a 2001 bond issuance is about $110m including principal, interest, and penalties, says S&P. The company made no provision for this claim in its financial statements and has announced that it will appeal. Nevertheless, S&P says it is likely that Alto Parana will have to pay about $80m, including principal and interest, before the courts determine whether the appeal is valid. Such a payment could hurt the company’s liquidity and stand-alone credit quality, say the agency. Alto Parana is a subsidiary of Celulosa Arauco y Constitucion.
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Pemex Weighs Diversified Financing Options
Pemex is considering a pair of new fundraising ideas that were floated last year: Bonos Ciudadandos and the CCD quasi-equity structure. In November, Mexico’s deputy minister of finance Alejandro Werner said Pemex was considering hybrid instruments with equity features to open up financing to equity-like exposure. “[The CCD structure] is something that we can contemplate for specific project financings, but it’s not something for Pemex general corporate fundraising,” Mauricio Alazraki, managing director of finance at Pemex, tells LatinFinance. He notes that there are no specific plans to go to that market at the moment. The state-owned oil producer and finance ministry are, however, developing the Bonos Ciudadanos as a means of offering performance-related returns. The retail bonds available in denominations small enough for individual investors should include both fixed and variable-rate components, Alazraki explains. Pemex is still deciding how they will be structured, and they are not considered in this year’s fundraising, he says. An eventual offer could be comparable in size to Pemex’s typical domestic DCM offerings, adds Alazraki.
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Mercatto Launching Offshore Funds
Brazil-based asset management firm Mercatto Investimentos is launching 2 offshore funds this year. One is focused on investing in equity listed on the BM&F Bovespa, and the other, macro fund, will invest in equity, foreign currency and derivatives, managing partner Thomas Tosta de Sa tells LatinFinance. He declines to state how much the shop expects to manage under the 2 funds. He adds that the funds will only be open to investors outside Brazil. Mercatto already has an equity fund and a macro fund in which Brazilian investors can invest, which were established in 1998. The equity fund has BRL154.6m in net assets and the macro BRL77.9m, according to company information. Mercatto has more than $1.5bn in total assets under management.
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EM M&A Trumps US/Europe; Mexico Shines
The volume of M&A deals announced in EM is beating that of the US and Europe so far this year, with 65% of activity in the asset class from LatAm, according to analysis from Thomson Reuters. “This marks the first instance on record that Emerging Market-targeted M&A constitutes a greater portion of global M&A than either the US or Europe,” says the firm. It also indicates that year-to-date announced M&A deals in EM account for 48% of deals ($93.3bn in deals) announced globally, the highest since the last peak of Q1 2008, when it was 24%. Mexican-targeted M&A accounted for 44.7% of global M&A activity for the year to date, while Brazil accounts for 16.2%, says Thomson Reuters. Telecoms is the most targeted industry for EM M&A year to date, comprising 39.7% of global activity. Among the largest deals to have been announced so far this year are America Movil’s intended acquisition of Telmex International for $6.6bn and Carso Global Telecom for $27.5bn, which essentially constitutes an internal Slim asset shuffle. In addition, there is Heineken’s purchase of Femsa’s beer unit for $7.3bn stock, Cosan’s acquisition of Shell International Petroleum in Brazil for $5.2bn and Braskem’s acquisition of Quattor Participacoes for $4.1bn.
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BrasilAgro CFO Steps Down
Carlos Aguiar plans to step down as CFO of BrasilAgro Friday, the agricultural property developer says. Aguiar, who has been with BrasilAgro 3 years, tells LatinFinance he is taking a new job, but declines to give any additional detail. Julio Toledo Piza, the company’s president, will fulfill the roles of CFO and investor relations director until a replacement is hired. The developer of agricultural properties for resale is co-owned by Cyrela Brazil Realty founder Elie Horn, as well as Tarpon Investimentos and Cresud. Some 54% is free-floated, following an April 2006 IPO that raised $276m.
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Brazil Inc Snookered by Cimpor Bids
Camargo Correa is acquiring 22%-25% position in Cimpor, driving Brazil Inc’s pursuit of the Portuguese cement company into an awkward stalemate. Camargo bought a 22% share in Cimpor that belonged to Portuguese engineering firm Teixeira Duarte for EUR6.50 a share, valuing the deal at EUR961m. Moody’s says Camargo will partially fund this with long-term debt rather than cash. The cement specialist says it has purchased the option to acquire an additional 3% from third parties, making it the single largest entity to own a piece of Cimpor. The race is on to secure remaining smaller pieces of the company held by minority investors, say people close to the process. The next largest holder is Votorantim, which last week secured a 17% stake in Cimpor through a share swap. It also formed a shareholder agreement with Caixa Geral de Depositos, which owns 10%, turning the pair into a single bloc with 27%. “There are still remaining stakes [to go after,]” says an executive close to Camargo. “This soap opera isn’t over yet,” he adds. Among minority shareholders in Cimpor are Manuel Fino (11%), BCP’s pension fund (10%), Bipadosa (7%), Cinvest (4%) and the public (19%), according to Cimpor. The lunges from Voto and Camargo effectively shatter CSN’s bid to acquire a controlling stake in Cimpor, which is being done through a public tender that expires February 17. CSN seeks a controlling stake and up to 100% of the company. Its EUR5.75 a share offer via a cash bid has been rejected by Cimpor’s board, but could still draw interest from would-be sellers, estimate some analysts. If CSN acquires all of the stakes that have not been consumed by its compatriots Voto and Camargo, it could get 48%, though that seems unlikely at this point, given the offer is well below what Camargo paid. If it did, however, it would jointly own the company alongside the 2 Brazilians it is trying to steal market share from. Elsewhere, CSN has gone to Brazil’s antitrust regulator to file a complaint about the
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Mitsubishi Takes Stake in Chile Miner
MC Inversiones, a Chile-based investment vehicle of Mitsubishi, is taking a 25% stake in Cia. Minera del Pacifico (CMP), a mining subsidiary of steel company CAP for $924m. Mitsubishi will merge its Cia. Minera Huasco with CMP, gaining a 15.9% stake in CMP. It will then fund a $400m capital increase in CMP, elevating its stake in the mining company to 25%. The seller values the total stake purchased at $924m. CAP says it will hold a shareholder meeting March 10 to approve the deal. CAP also says it has hired Celfin Capital to analyze the deal and that JPMorgan conducted a fairness opinion on the transaction. Japanese firms aim to secure a long-term and stable supply of resources, according to the Japan Bank for International Cooperation, which last month signed a $245m loan for Chile’s Minera Los Pelambres to finance expansion. Pelambres is 60% owned by Antofagasta alongside Nippon Mining & Metals Co, Mitsubishi, Marubeni and Mitsui.