Brazilian airline Gol plans to raise BRL550-BRL650m in new equity capital following a tripling of its stock price over a 5-month period. The company has filed with the CVM to issue primary and secondary stock in the form of preferred, ordinary and ADS. The deal falls in line behind September hopefuls like Santander, whose offering could reach BRL4bn-BRL6bn, and Tivit, which is expected to bring the year’s smallest offering to date, at around BRL600m. Gol will compete in size with Tivit, which raises the question of how well it will be received by a fussy investor base focused on liquidity. “This will help increase the company’s liquidity,” says an analyst who declines to be named. He notes average daily turnover for Gol’s stock, which this year stands around 1.0%-2.5% of market cap, is lower than many Bovespa-listed names. A banker on the deal concurs, noting that capital structure should also benefit. Gol says it intends to use proceeds to strengthen its balance sheet, particularly its cash and cash equivalents position. Gol shares sank 7.71% Tuesday on the news as investors took profit. In August alone, Gol shares have soared 40%, beating the Bovespa’s 3.2% rise. Controlling shareholders, which make up the Asas Investment Fund, will be subscribing to the new offer to maintain the ordinary to preferred ratio of 1:1, and use all proceeds from their sale of preferred shares to purchase common units. BofA Merrill, Itau BBA, Morgan Stanley and Bradesco BBI will jointly lead the international deal, with BB Securities as placement agent outside the US. Gol claims to be the largest low-fare airline in LatAm.
Category: Bonds
CAF Capital to Jump by $4bn
Multilateral CAF has approved a capital increase of $2.5bn. This, in addition to the $1.5bn that it expects to gain from the entry of Argentina, Brazil, Panama, Paraguay and Uruguay as full members, will bring the total capital increase to $4.0bn, the bank says. It adds that the $2.5bn capital increase, which will be paid for between 2010 and 2017, will allow CAF’s assets to triple to $12bn in 8 years and to sign more than $100bn in loans during the same period. So far this year, it has approved $5.5bn in loans.
IDB Considers $1bn Credit for Mexico
The IDBs board will take proposals for a $1bn credit line for Mexico’s Nacional Financiera (Nafinsa) bank later this year, an IDB spokesman confirms, adding that negotiations for the credit line will likely take place with the finance ministry. Nafinsa, is a state-controlled entity, extends credit to small and medium-sized enterprises in Mexico.
CAF Approves $2.2bn in Loans
Multilateral CAF has approved $2.2bn worth of financing to Argentina, Colombia, Ecuador, Peru, Uruguay and Venezuela. Peru is getting two loans totaling $600m. One, worth $300m, will finance the Lima Electric Train and the other half will be used to deal with emergencies caused by natural phenomena. Venezuela is also getting $600m to finance its Termozulia thermoelectric plant. Colombia’s Treasury Ministry will receive $400m so it may continue to decentralize operations. Meanwhile, a $275m loan goes to improve water and sewage systems in Argentina’s capital. And Ecuador will get $250m to optimize its electricity infrastructure. Lastly, Uruguay will receive $100m to develop its road infrastructure. Terms of the loans were not disclosed and CAF did not return calls.
Deutsche Poaches Merrill DCM Banker
An August 14 Daily Brief “Deutsche Poaches Merrill DCM Banker” incorrectly describes the nature of the move. It should read “Deutsche Hires Merrill DCM Banker.”
IDB Feeds Mexico Mortgage Support
The IDB has approved a $500m loan for Mexico to support its mortgage industry. This is the second installment of a $2.5bn 10-year credit line, the bank says. The loan will enable Sociedad Hipotecaria Federal (SHF) to continue offering lines of credit to Sofoles and Sofomes, and maintain liquidity in secondary markets through the acquisition of bonds backed by mortgages. The loan is for a 25-year term, with a 5-year grace period, at an adjustable interest rate over Libor.
Deutsche Poaches Merrill DCM Banker
Deutsche Bank has hired Francisco Hernandez, a director in charge of Bank of America Merrill Lynch’s Mexico DCM group. Hernandez, expected to start next week, will be assuming a similar role at Deutsche, heading up its Mexico DCM effort, also as a director. Hernandez follows a similar move by Alberto Ardura, Deutsche’s head of LatAm DCM and client coverage, who joined from Merrill in May. Ardura himself was brought over by Karan Madan, a former senior Merrill executive now in charge of Deutsche’s EM sales, trading, coverage, and structured products. In Mexico, Tito Vidauri remains CEO of Deutsche’s Mexico office. The moves come as Daniel Sontag, head of Merrill Lynch’s brokerage unit, is stepping down after BofA’s hired of Sallie Krawcheck to head global wealth and investment banking, above Sontag. Executives close to BofA Merrill insiders say they expect more departures among the firm’s brokerage ranks.
LatAm Remittances Drop 11%
The IDB forecasts that LatAm and the Caribbean will see remittances drop by 11% in 2009 to about $62bn. Remittances from the US – where unemployment among Latin Americans is higher than among the general population – are also expected to decline by 11% to about $42.3bn this year. Remittances from Europe, another major destination for Latin American migrants, are expected to drop by 14% to about $9bn. Remittances from other parts of the world will slide about 4.5% to $10.4bn.
Suzano Receives BNDES Line
Suzano Papel e Celulose, Brazil’s second largest paper and pulp company, has been granted a BRL705m credit line from BNDES, it says. Tenor and pricing will depend on the use of proceeds when the company chooses to draw on the line, says a BNDES spokesman. Suzano plans to use proceeds to finance investments in production. BNDES declined to disclose details of the facility.
Brazil State Gets $50m Road Loan
The IDB has extended a public, guaranteed $50m loan to the state of Santa Catarina to improve its state highways. The facility has a 25-year life and 3-year grace period, paying a Libor-based spread. In the first half of 2009, the spread over Libor for the project was equal to 30bp, implying an annualized rate of 60bp over Libor, though that spread is expected to be reset to a new level for the second half, say people familiar with the transaction. The financing covers 70% of the project costs. The funds are being used to repair, upgrade and increase safety of around 50km of roads linking the cities of Lindoia and Irani, and Sao Domingos and Bom Jesus.