Brazil’s Banco Bradesco has signed a memorandum of understanding to acquire credit-card issuer Ibi Mexico for an undisclosed amount in cash, according to a bank spokesman. This is not Bradesco’s first deal with Ibi. In June 2009 it acquired Ibi’s Brazil unit for about BRL1.4bn in stock. Similar to the Brazil deal, Bradesco will take over Ibi Mexico’s credit portfolio of MXP1.3bn. The transaction includes execution of a 20-year partnership agreement with clothing retailer C&A Mexico to jointly and exclusively sell financial products and services through the C&A Mexico chain. Ibi Mexico has shareholder equity of MXP566m. A Bradesco spokesman says the bank is still doing due diligence and a final price will be disclosed by the end of March, when the deal closes.
Category: Daily Brief
Vale Divests Aluminium Assets
Brazil’s Vale says its wholly-owned subsidiary Valesul has entered into an agreement to sell its aluminum assets, located in the state of Rio de Janeiro, to Aluminio Nordeste, part of the Metalis group, for $31.2m. The assets include an anode plant, a reduction plant, a smelter, industrial services, admin facilities and inventories. Valesul operated an aluminum smelter with nominal capacity of 95,000 tons per year until last March. It then became a small producer of billets for extrusion using purchased primary ingots and scrap as its main raw materials.
Kroton Unveils Voluminous M&A
Brazilian educational company Kroton is days away from clinching the purchase of 4 schools in the Amazonian Brazilian states of Rondonia and Acre. A company spokesman says a Valor report suggesting the deal is worth BRL600m gives a reasonable idea of the transaction’s scale. He declines to provide a precise number. Itau BBA is advising Kroton on the deal. Kroton has until March 2010 to close the deal, which would substantially boost its size to include 100,000 post secondary students, up from 46,000 in Q3. It would also have 230,000 primary and secondary students.
Citi Selling Chile AFP Stake
Citi has reached agreement with Invesco and Inpresa to sell its 40.23% indirect ownership in AFP Habitat for approximately $300m. Citi and Invesco have an equal part ownership in Inpresa, which owns 80.46% of Habitat. According to Citi, Habitat is the second largest pension fund administrator in Chile, with $29bn assets under management and 24% market share in terms of covered persons. Citi’s indirect interest in Habitat will be sold via public tender offer to be conducted by an affiliate of Invesco for all outstanding shares of Habitat. The tender is expected to launch and close by mid-May, subject to approval from the Superintendencia de Pensiones and the payment of an extraordinary dividend by Habitat. Citi says the deal is consistent with its strategy of focusing on core businesses. “Citi remains committed to the Chilean market,” says
Fernando Concha, CEO for Citi’s South America cluster. Citi has a partnership with Banco de Chile. The transaction is not expected to have a material impact on Citi’s net income.
BNP Panama Sale Expected in H1
BNP Paribas will this year exit Panama through the sale of its bank there, a senior official at the French institution confirms. “We are in the process of closing the sale of the branch,” says the banker. “We hope [it will be sold] in the first half of the year,” he adds. BNP was late last year rumored to be selling down a significant loan portfolio in the country, but the official says that the books involved in the sale are not large. Most of the clients were apparently mid-market and domestic. The decision is related to the OECD’s inclusion of Panama on a grey list of countries that have not fully implemented global tax standards.
Colombia Shoots for H1 Dollar Bond
Colombia aims to raise before June the $500m it needs to borrow internationally under this year’s plan, the finance ministry’s external markets director Patricia Moreno says in a conference call with investors. The sovereign was able to complete 80% of its 2010 borrowing through 2009 pre-funding. Moreno says the government would like to complete the remainder by June, as this is an election year. “We will consider a reopening of an outstanding bond if the market is there, or a new issuance,” she says. Moreno does not give a more specific indication of timing, explaining that the government will monitor the markets for the right window. In addition to $500m from international markets, the government requires this year $1.7bn from multilaterals, and will also raise COP13trn ($6.56bn) from auctions of domestic TES bonds.
Banco de Bogota Plans Bond Issues
Banco de Bogota says it plans to issue up to COP1.5trn ($760m) in local bonds this year to finance working capital. CFO Maria Luisa Rojas tells LatinFinance that a first issue of up to COP300bn will be made in February. Banco de Bogota itself will manage the sale. Banco de Bogota, Colombia’s second largest bank in terms of assets, is part of Grupo Aval.
Equity Issuers Ebb and Flow
The second and third weeks of January have seen a slew of new equity filings for IPOs and follow-ons (FO), as well as updates to filings made in the final weeks of December. The flow, which until last week included 5 IPOs and 4 follow-ons, is indicative of a strong conviction on the part of issuers, say bankers. However, as of Thursday, 2 companies planning follow-ons appeared poised to pull out. Metalfrio, the commercial refrigerator and freezer maker, was heard close to pulling plans to raise around BRL370m in a follow-on scheduled for January 28. Bankers away from the deal suggest investor interest may be cool, though there is also the possibility of parallel M&A discussions. Metalfrio, which hired Credit Suisse, Itau and Morgan Stanley to lead the FO, has not filed a statement on plans to alter the course of the deal, scheduled to price January 28. M. Dias Branco meanwhile filed a statement saying its controlling shareholder, whose shares account for most of the planned secondary offer, suspended the sale, scheduled for February 4. It cites market conditions and timing as the reason. The Bovespa dropped around 4% last week to 66,220 and is down around the same amount since the start of the year after spending some of January above 70,000. Executives close to the process say the move is based on a decision to issue at a better multiple after having further grown the company during the first part of 2010. M. Dias Branco is looking to achieve a Novo Mercado listing by October 2010 and will likely return to market by then, say executives close to the process. Itau BBA and BofA-Merrill were slated to lead.
Minerva Prices Tight Despite Rough Market
Despite tough global markets conditions, Minerva has raised $250m in 2020 NC5 bonds through the first single B Brazil deal of 2010. The meatpacker priced late Friday the B/B3 bond at 98.131 with a 10.875% coupon to yield 11.200%, toward the tight end of 11.25% area guidance. The new bond was heard trading around reoffer in the gray late Friday, according to investors. It was likely helped by recent tightening in the outstanding 2017 through 10.00%, investors say, even as much of the market moved the other way. “Given that the market has been trading off and initial guidance was higher, this priced tighter than expected,” says Juan Cruz, head of Latin America corporate credit research at Barclays. “This is not a credit without risk, so for them to price at this level is positive,” he adds. Proceeds are earmarked for refinancing 2010 and 2011 maturities, as the issuer looks to reshape a challenging financial profile that includes 7.7x total debt/Ebitda, the highest of its peers, according to Barclays. Goldman Sachs and Banco do Brasil managed the sale. Minerva’s previous dollar bond was a $150m 9.5% of 2017 sold in January 2007 via Credit Suisse, Santander and Bradesco. It was reopened the following month for $50m. It remains unclear whether the global selloff deters other Latin high-yield issuers in the pipeline, including Marfrig and Vanguarda from the Brazil food sector.
Brazil Creates Petrochemicals Force
In a well-telegraphed final step in the consolidation of Brazilian petrochemicals, Braskem, Petrobras and Unipar have announced terms on a deal that gives the former control of LatAm’s single largest collection of assets in the sector. The deal, valued at BRL870m in equity plus BRL6.69bn in assumed debt, involves not just Braskem’s purchase of Unipar’s stake in Quattor. It also creates a “new” Braskem that will consolidate ownership of the assets with funds from Petrobras and Braskem’s leading shareholder Odebrecht. In chronological order, the steps to capitalize Braskem include: creation of a holdco called BRK owning 93% of Braskem’s voting shares; direct equity injections into BRK by Petrobras and Odebrecht totaling BRL3.5bn, of which BRL2.5bn comes from the latter and the remainder from the former. This will leave Braskem with control of 54% of BRK and Petrobras with 46%. There will also be a private rights offering to Braskem shareholders worth up to BRL5.0bn, whereby BRL3.5bn will be accounted for by BRK. Once that is done, Braskem will get Unipar’s 60% stake in Quattor for BRL647m. It will also purchase BNDESPar’s holdings in Quattor for BRL170m. Lastly, Braskem will pay another BRL53m for 2 of Unipar’s holdings in Polibutenos and Unipar Comercial. Braskem will pay Unipar in at least 3 installments: BRL50m by February 18; another BRL50m by March 4, and the remaining BRL547m within 5 days after regulatory approval. Quattor’s net debt totals BRL6.69bn, which Braskem will also assume.