Category: Corporate & Sovereign Strategy

Mexico’s Grupo Cementos Chihuahua (GCC) says it has completed a debt renegotiation. The cement maker has combined 2 syndicated loans and 2 bilateral loans in to a single $454.5m facility. The new 2015 loan pays Libor plus 4.5%. Also, creditors agreed to reduce interest on $283.6m in privately placed notes due 2015. The notes will now pay 5.0%, stepping up 100bp a year, down from 6.8%. Assets at GCC operating subsidiaries will guarantee the debt, until leverage goes below 3x. Leading lenders to GCC have in the past included BBVA, ABN AMRO (now RBS), Wells Fargo, JPMorgan, Barclays, HSBC, Citi and Scotia.

Argentina is reportedly extending by 2 weeks the deadline for investors to participate in its defaulted debt offer, which has thus far been poorly received. Wires late Monday cited remarks from economy minister Amado Boudou and his spokesman confirming the delay. According to Dow Jones, Boudou expects investors to swap at least 60% of the defaulted debt eligible for the exchange. Only $8.5bn in bonds had been tendered by the May 14 deadline for institutional investors, little over 45% of the $18.6bn the sovereign admits to owing. Retail investors had until June 7 to commit, but their interest was understood to be limited. Barclays is global coordinator, with Citi and Deutsche as joint dealer managers. Meanwhile, holdouts are gaining traction with legal action, securing restraining orders on the sovereign’s assets.

Mexican retailer Comercial Mexicana has reached a debt-restructuring agreement with the majority of its creditors, it says, and will issue around $1.54bn in various tranches. The new debt has an average maturity of 6.7 years, it says, and consists of MXP16.32bn in fixed-rate debt paying 9.25% and floating-rate debt paying TIIE plus 275bp-400bp, as well as $226.3m in 7% dollar bonds. It also includes a cash payment of $45m on closing, and a lock-up fee for certain bondholders equivalent to 1 percentage point of principal amount held. Comerci, which defaulted in 2008 after severe derivatives losses, will put the deal to a shareholder vote June 11, and seek the necessary approval of creditor committees. The agreement excludes MXP1.5bn in domestic bonds recently swapped for new 7-year notes, and the new debt is backed by the company’s real estate holdings and stock. Fitch withdrew Comerci’s D rating.

Fitch has downgraded Mexico’s Sanluis Corporacion to C from CC and predicts poor recovery prospects in what it sees as an increasingly likely default on the debentures due June and mandatory convertibles due June 2011. “With only $18m of cash and marketable securities, the company is not expected to meet its June 2010 debt obligations,” says the agency. Fitch also chopped Sanluis Rassini Autopartes to C from CC. “These downgrades are due to the exceptionally high level of refinancing risk faced by Sanluis during June 2010 due to the maturity of $125m on secured bank debt (Suspension Group Debt) and the $86m debentures. The unsecured notes were issued by an intermediate holding company, Sanluis Co-Inter, and therefore structurally subordinate to the secured debt at the level of the operating companies. Fitch also affirmed the company’s $125m senior secured restructured credit facility rating at CC and revised the recovery rating of the facility to RR3, implying recovery of 51%-70%. Sanluis entered a standstill agreement with secured creditors in March. As of March 31, Sanluis had $360m of total debt, which consists primarily of $125m of secured restructured debt, $86m in 8% guaranteed senior notes due in June, including capitalized interest; and $122m in 7% mandatorily convertible debentures due in June 2011, including capitalized interest. Sanluis is a manufacturer of suspension and brake components. Its business has been under extreme pressure in recent years due to the dramatically decline in demand for light trucks in North America. Performance is closely linked to GM, Ford and Chrysler, which represent approximately 65% of revenues.

BNP Paribas has acquired Hill Street Capital, an investment banking boutique, in a deal that gives it M&A and restructuring coverage in Mexico. “It’s going to add Mexico,” Hill Street founder Lorenzo Weisman tells LatinFinance. “It’s a very good fit.” He adds that BNP has typically concentrated on Brazil and the Andean region. Weisman becomes head of corporate finance for the Americas at BNP, while co-founder John Brim is appointed head of corporate finance energy and commodities for North America. “We have made solid inroads into mergers and acquisitions and other forms of corporate advisory services in North and South America in recent years,” says Alain Papiasse, head of corporate and investment banking at BNP. “We have decided to take this additional step in a targeted expansion of that franchise.” The price of the deal was not disclosed. No outside banks were used to advise the M&A. Hill Street becomes an integral part of BNP.