BNDES has approved a BRL1.42bn 8.5-year credit facility for the local unit of Anglo American. Anglo will draw the funds to expand its Barro Alto nickel mine in the state of Goias. The loan will pay a spread over TJLP, a BNDES official tells LatinFinance, declining to specify the exact margin. Anglo plans to spend BRL3.1bn on expanding the mine. Earlier this year, it acquired control of two Brazilian iron ore projects from MMX for BRL5.4bn.
Category: Daily Brief
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Grupo Mexico Buys Cinemex
Grupo Mexico’s entertainment arm has bought Mexican movie theater business Grupo Cinemex from AMC Entertainment for $311m. The strategic sale, which was five months in the works, is expected to close in 60 days and was done to generate cash. Grupo Mexico, which apparently did not use an advisor, will fund the deal with cash on hand, says a banker familiar with the transaction. The deal was done by competitive 2-phase auction. Credit Suisse advised the seller. Cinemex operates 44 theatres with 493 screens primarily in the Mexico City Metropolitan area. Prior to this deal, Entretenimiento GM de Mexico bought another movie theater chain in Mexico, MM Cinemas.
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Syngenta Picks up Argentine Seed Company
Swiss headquartered global agricultural company Syngenta has acquired Argentina’s SPS, a seed specialist, for an undisclosed amount. SPS specializes in soy, corn and sunflower seeds and had $15m sales in the year ended March. Syngenta’s LatAm seeds division generated $146m in revenues in 2007, while its crop protection division earned $1.42bn, a spokesman tells LatinFinance. In the first quarter of 2008, those divisions have posted annual growth of 55% and 41% respectively. Most of Syngenta’s LatAm business is focused on Brazil and Argentina. Syngenta did not hire an advisor and paid for the asset with cash.
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BdB Closing on Nossa Caixa
Banco do Brasil (BdB) is close to clinching Nossa Caixa, say people close to the matter. A BdB official confirms that talks are in the final stages surrounding valuation. The discussions are being held exclusively between the two parties and Bradesco is not in the running, adds the BdB official. This confirms analyst speculation that privately held institutions would shy away from Nossa Caixa in light of a decision last week favoring state-owned banks’ exclusive right to manage judicial deposits. Local press reports Monday say president Lula has approved the deal and that the value of the transaction is hovering around BRL6.4bn. Nossa Caixa is advised by JPMorgan and Morgan Stanley.
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Bradesco, Mitsubishi Raise Government Bond Fund
The asset management arms of Brazil’s Bradesco (BRAM) and Japan’s Mitsubishi (MUAM) have raised a BRL370m fund. The so called Saiken Fund is raised among Japanese investors and will invest in Brazilian federal government securities. It will not have any currency protection, and will be benchmarked against the IRF-M, a fixed income index measured by Brazil’s Andima, the financial markets association. BRAM will manage the fund.
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IFC Disburses Peru Gas Funds
The IFC has disbursed a $15m 4-year revolving senior debt facility to BPZ Exploracion y Produccion to help it exploit Peruvian natural resources. It is working with commercial banks to add $200m deal under the same terms. “As the credit markets have dried up, IFC has stood alongside BPZ as a strong partner,” says Manolo Zuniga, BPZ’s president and CEO. The loans will support BPZ’s drilling program in offshore Block Z-1’s Corvina oil and gas field and the start-up of its Nueva Esperanza power plant, which will be fired with gas supplied from the Corvina field. IFC’s loan complements previous equity investments worth $39m.
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Fitch Turns Negative on Mexico, Chile
Fitch has revised the rating outlook of Mexico to negative from stable, and of Chile to stable from positive, following a review of 17 major investment-grade EM economies. The revision of Mexico’s BBB+ rating “reflects concerns over the capacity of the economy and policy framework to absorb smoothly three simultaneous external shocks: the worst US recession for 25 years, reduced capital and financial market flows and lower oil prices,” the agency says. Fitch is also concerned that the fiscal and external cushions Mexico has in place to absorb the shocks are small relative to peers, and that its corporate sector is especially vulnerable. The move on Chile’s A rating reflects an upgrade being less likely given the recent decline in commodities and slowdowns in the economies of trading partners. Fitch affirmed the BBB minus ratings and stable outlooks of Brazil and Peru. Following the Mexico move, Fitch revised the outlook from stable to negative on eight Mexican banks: BBVA Bancomer, Banamex, Santander, HSBC, Nafinsa, Banobras, Bancomext, and IPAB. Chile’s Enap and Codelco were dropped to outlook stable from positive.
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Codelco Heard Picking Banks for Bond
Chilean state-owned copper producer Codelco is understood to have mandated and HSBC and JPMorgan for a bond issue which is unlikely to happen short term. The two apparently took the highest rated LatAm corporate credit on an extensive roadshow in September but they have kept their powder dry ever since. A $500m-$700m 10-year trade was initially expected, but the copper producer is choosing its timing with care. “The market is theoretically open for a name like Codelco,” says a banker who pitched for the deal but lost. “But there is still the problem of willingness to pay.” The banker adds that Codelco would be comped versus global peers like BHP and Rio Tinto, rather than the sovereign, and may not be willing to pay the extra spread required for commodity weakness. The local market, which sprang to life last week with an Arauco trade, is not deep enough for Codelco, which tends to issue in size. Codelco has historically brought bonds every year in the fourth quarter, though last year it opted for a tightly priced loan. In 2006, it issued a $500m 6.15% of 2036 through Deutsche Bank and HSBC at 99.296 to yield 6.202%. Expect Codelco to be among the first LatAm bonds out the gate when markets stabilize, likely early 2009, and high grade jumps back in.
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Cemex Sells Canary Islands Unit
Cemex is selling its Canary Islands operations to Cimpor Inversiones, a Spanish investment holding company for approximately EUR162m, in addition to a separate payment for working capital. JPMorgan and RBS were financial advisors and closing is subject to the approval of Spanish regulatory authorities. The transaction includes cement and ready-mix assets in Tenerife and 50% of the shares of 2 joint-ventures, Cementos Especiales de las Islas and Inprocoi. They together generated approximately EUR189m in revenues during 2007. Cemex manages directly and through joint-ventures in the Canary Islands 2 grinding mills and 19 other plants including ready-mix, mortar and precast facilities. Proceeds from the sale will be used to reduce debt. Cimpor is a subsidiary of Cimpor Cimentos de Portugal.
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ICAP Snags Brazil Broker
London-based broker ICAP is acquiring Arkhe DTVM, a Sao Paulo-based BM&FBovespa broker, for $17m, or 6x the target’s post tax 2007 earnings. “ICAP’s strategy in Latin America is to . . . establish a strong base in Brazil alongside our existing operations in Argentina, Chile, Colombia, Ecuador and Mexico,” Doug Rhoten, CEO of ICAP Americas tells LatinFinance. “Our aim is to [cover] the financial, equity, and commodities markets and to deploy [our] technology throughout the region,” he adds. Brazilian brokers have been the object of much interest from foreign trading shops seeking to establish a presence in LatAm’s largest equity and derivatives market. Brokers who were members of the exchanges before their demutualization are looking to cash out by selling to foreigners. They have additional incentive to do so before an inevitable wave of technological innovation renders their businesses and assets obsolete and worth much less than they are today. In August, UK-based BGC Partners bought Liquidez DTVM for an undisclosed amount. Earlier this year, Citi bought Intra, Bradesco bought Agora and Colombia’s InterBolsa took a majority stake in Finabank. Elsewhere in LatAm, ICAP recently set up an electronic trading joint venture with Cabei.