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.
Category: Daily Brief
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.
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.
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.
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
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.
Drill Platforms Flip to Bonds From Loans
In a novel development for LatAm platform financing, 2 issuers are turning to the bond market as bank lenders hit capacity. Mexico’s Grupo R and Brazil’s Schahin are preparing bonds to fund offshore drilling after having relied almost exclusively on banks in recent years. Following pushback in December, Grupo R has retooled a plan to raise $463m in 5-year funds in the loan market via BBVA. The problem, say syndicators, is that some banks were not comfortable with Pemex’s variable day-rate contract, which increases the risk of the deal from a creditor’s standpoint. The new plan involves having its RDS Ultra-Deepwater subsidiary issue $260m in 2017 NC4 bonds via Jefferies. It will also do 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. A US and Europe roadshow for the 144A/RegS bond begins today, ending February 23. Elsewhere, Grupo Schahin is heard readying a new $310m 6.5-year bond via Nomura for its Lancer platform, which in September renewed a 7-year contract with Petrobras. The 32-year old Lancer platform has typically relied on bank financing, the last of which was done in 2005. But with Schahin having just renegotiated a $800m 10-year contract for its troubled Black Gold platform, and the jumbo Black Diamond twin drillship seeking $1.4bn in 2010, the company is rightly concerned that banks may be hitting capacity for the its debt. “These guys need money,” says one syndicator. “I hope [the bond] gets done, but I have my doubts,” adds another lender. Lancer is apparently contingent on the notes receiving an investment grade rating. A bank market participant familiar with the borrower estimates the coupon could easily hit double digits given the quality of the collateral
Correction: BdB Accelerates Dollar Lending
A February 7 brief entitled “BdB Accelerates Dollar Lending,” includes an inaccurate listing of Banco do Brasil’s 2009 deals as outlined by a bank official. A BdB spokesman clarifies that the bank did not participate in a pre-export loan to Cosan.
Moody’s Drops Lupatech Rating
Moody’s has chopped the rating on Brazil’s Lupatech to B2 from B1, amid continued cashflow and operating margin pressures. “Even though Lupatech has likely benefited from the resumption of bids for equipment and services in late 2009 by its most important client Petroleo Brasileiro, the conversion of the additional backlog into sales and cash flow should only materialize over the longer term,” it says. Moody’s notes that operational inefficiencies derived from persistent low capacity utilization are likely to continue. It sees total adjusted debt to Ebitda peaking at 13.0x in the first half 2010, up from 8.8x in September. The agency put the oil and gas equipment manufacturer under review in November. At the time, Lupatech was wrapping up a 7-month liability management operation that featured a BRL121m credit facility from the BNDES and a BRL320m 2018 convertible debenture sale that was 90% bought by BNDES. Lupatech also recently got debentures holders to waive breached financial covenants and postpone the next verification date to December 2010, when Moody’s expects Lupatech to be back in compliance with financial covenants. Lupatech has $275m outstanding in 9.875% coupon perpetuals. The rating outlook is stable.
Costa Rica Ratings Affirmed After Chinchilla Win
S&P has affirmed Costa Rica’s BB/B foreign currency ratings and stable outlook after Laura Chinchilla, of the National Liberation Party, won presidential elections Sunday. Credit analyst Joydeep Mukherji says that “the stable outlook reflects our expectation that the next administration of president-elect Chinchilla will maintain stability in key economic policies.” He adds that “the recent increase in the general government fiscal deficit likely will be reversed this year as tax revenues rise along with a recovery in GDP growth. As a result, the government’s debt burden likely will remain stable in coming years.”