Quattor Participacoes, the holding company for petrochemicals producer Petroquimica Uniao, has repurchased 95.33% of Uniao’s outstanding shares for BRL271.6m. It paid BRL15 each for 6.5m ordinary and 11.1m preferred shares. Quattor plans to delist Uniao, now that it possesses more than 99% of the share capital. Uniao’s ordinary shares closed Wednesday at BRL15.39.
Category: Daily Brief
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Mexico Says Basta to Subasta
Mexico’s central bank refused to pay what investors offered for up to MXP15bn in off-the-run government bonds at auction Tuesday, electing not to buy any. Investors offered to sell MXP8.6bn in 8% of 2013 bonds at MXP97.3-MXP98.4. They offered MXP103.6-MXP104.7 on MXP10.3bn of 9.5% 2014 bonds and MXP95.8-MXP97.4 on MXP5.8bn in 8% of 2015s. The deal was to have been the first in a series of auctions to repurchase domestic bonds with 10-30-year maturities, as part of a MXP40bn liquidity stimulus plan. The government did not give any indication as to the status of future buybacks under the program.
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TI to Raise Stake in Argentine Unit
Telecom Italia executives say the company will exercise its call option to increase its stake in Telecom Argentina next year. The Italian company owns 50% of Sofora, Telecom Argentina’s majority owner, and plans to take over the remaining half, which is 48% owned by the Werthein Group, while France Telecom has the remaining 2%. The executives say that once the option has been exercised, Telecom Italia will bring in a local partner who will take on a “significant” portion of the new stake, which they say is worth up to $180m. Telecom Italia also has announced that it is cutting 4,000 jobs and selling non-core assets to raise up to EUR3bn to pay down EUR37bn in debt. While it does not specify which assets are for sale, it does say that only the Italian and Brazilian markets are considered core.
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Bimbo Bakes Jumbo US M&A
Continuing the trend of LatAm corporates expanding beyond region, Mexico’s Grupo Bimbo is close to acquiring US assets belonging to Canada’s Weston Foods for upwards of $2bn, say people away from the transaction. The Mexican bread and confectionary manufacturer – whose Bimbo Bakeries USA subsidiary already distributes Weston Foods brands in the western US – is understood to be seeking to acquire the eastern distribution assets of the same brands. These include Thomas, Entenmann’s and Boboli. Bimbo, which is present in 12 LatAm countries, is heard looking to raise funds in the LatAm loan market for the deal, and has already tapped a group of banks. A size of roughly $2bn in multiple tranches is being talked about for the financing by bankers not on it. Among those rumored to be involved are BBVA, Citi, ING and Santander. Loans experts say it will probably be a club that is syndicated later on, given very tough market conditions. For advice on the acquisition, Bimbo is heard to have hired New York-based Atlas Advisors, an M&A boutique that earlier this year advised Grupo Kuo in its sale of an asset to Mexichem. At the end of September, Grupo Bimbo’s consolidated holdco debt stood at $1bn, according to S&P which rates the company BBB+ with total debt to Ebitda of 1.1x. Bimbo finance officials did not return repeated calls seeking comment and a spokesman declines to comment on specifics of the transaction. Atlas and the banks rumored to be lending to the company also decline to comment. Brazil’s Magnesita recently agreed to acquire Germany’s LWB and M&A specialists say high grade LatAm firms will continue to seek targets ex-region, despite the credit crunch.
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Bank of Jamaica Raises CD Rates
In an attempt to stabilize the local currency, the Bank of Jamaica says it has increased interest rates for certificates of deposits. Rates for CDs with 30-day tenors increased to 17.00% from 14.65%, 60-day CDs to 17.50% from 14.85%, 90-day to 20.00% from 15.05%, 120-day to 20.20% from 15.15%, 180-day to 21.50% from 15.35% and 365-day to 24.00% from 16.70%. The BoJ says a sharp rise in the yields on bonds issued by the local government and Jamaican companies has increased demand for foreign exchange by securities dealers to meet margin calls from overseas creditors, to which the BoJ responded by providing dollars as needed. “This has triggered a disorderly depreciation in the exchange rate, which if allowed to persist, will only precipitate higher inflation and greater macroeconomic instability,” says the bank. It also notes that domestic financial institutions hold significant amounts of its securities that are due to mature over the next three weeks and the resulting increased JMD liquidity could add further pressure on the exchange rate. JPMorgan notes that the relatively low level of FX reserves – $1.7bn-$1.8bn – prompts the BoJ to use rates rather than direct FX intervention to contain currency pressure. “The latest rate hike should help stabilize the Jamaican dollar in the coming weeks, which should also benefit from seasonal FX inflows (remittances) and lower FX demand from a falling oil import bill,” JPM notes. On December 2, the JMD closed at 78.00 per dollar. So far this year, the JMD has reached a low of 68.80 and a high of 80.00 per USD.
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Mexico’s International Reserves Rise
Banxico says that as of November 28, Mexico’s international reserves are up by $5.4bn compared to the end of 2007, at $83.4bn. Between November 24 and 28 alone, reserves increased by $2.4bn, driven by $1.2bn in currency sales, Pemex’s $600m in currency sales to Banxico and other operations worth $585m.
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Cosan Wraps Up Promissory Notes
Brazil’s Cosan has completed a sale of BRL1.1bn in 1-year promissory notes at DI plus 3%. Proceeds will help fund the acquisition of Esso fuel distribution and service station assets it bought in April from ExxonMobil for $1bn. Bradesco is managing the sale. The sugar and ethanol producer announced Monday the completion of the Esso asset acquisition following the payment of $715m to ExxonMobil and the assumption of debt of $175m.
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BNDES Extends BRL900m to EDB
BNDES has approved a 5-year BRL900m credit line for Energias do Brasil to help fund the energy provider’s BRL4.6bn 2008-2012 investment plan, it says. The lines will go to two of EDB’s distribution facilities, Bandeirante Energia and Espirito Santo Eletricas and power generator Energest to help fund generation projects. Funds drawn will have a maximum of 10 years in tenor and pay interest at the TJLP rate plus an undisclosed spread based on EDB’s credit profile. EDB is a subsidiary of Portugal’s Energias do Portugal.
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CAF Shells Out $660m in Credits
CAF has approved $660m in loans and credits to three separate borrowers. It agreed to lend $300m to Colombia’s Bancoldex, to help it support SMEs. The Andean development bank also plans to extend a $210m credit line to Panama’s Banconal. Finally, it will lend $150m to Uruguay’s UTE electricity generation and transmission administrator, to support a 3-year program to strengthen the country’s electrical system.
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Sofisa Targets 6% of Float in Buyback
Brazil’s Banco Sofisa plans to buy back up to 2.25m, or 6%, of its outstanding shares over a period of 1 year. The move comes as it wraps up a 1.5-month repurchase program in which it repurchased 1.5m units. The bank’s shares closed Tuesday at BRL3.70.