Colombia’s Suramericana de Inversiones could launch a road show for its ADRs later this year if the market shows signs of stabilizing, CEO David Bojanini tells LatinFinance. The ADRs were initially launched in October, but due to the global financial crisis, were not actively promoted to investors, he explains. “The idea was to let the ADRs evolve slowly, but we have already seen interest from international investors,” Bojanini says. He adds that the company is indirectly advertising ADRs to investors during international banking events. “We attend these events some five or six times a year,” says the CEO. The ADRs, each equivalent to two common shares, trade OTC under the symbol SRMIY. Since October, says the company, some 6,300 ADRs have been traded. When first launched, they traded at $13.79. The closing price March 4 was $11.81, unchanged on the day. The Bank of New York Mellon is the depository bank for the ADRs. Fiduciaria Bancolombia is the custodian.
Category: Corporate & Sovereign Strategy
Man of the Year: Inside the Setubal Rocket
After 15 years at the top of Itaú, Roberto Setubal has made it the biggest bank in LatAm. Savvy deal making is at the heart of his world-class financial institution.
Fitch Snips Mexican Diaper Producer
Fitch has downgraded Copamex’s senior unsecured foreign and local currency issuer default ratings to B+ from BB minus and the senior unsecured national scale rating to BBB from A minus. The outlook is stable. Fitch says that although management has implemented strategies that have allowed Copamex, the industrial paper and diaper maker, to obtain savings in operating expenses, they have not been enough to maintain the financial indicators in the levels according to the rating category. On December 31, the Mexican corporate reported a ratio of on balance sheet debt net of collaterals to Ebitda of 3.2x, an increase from the 2.9x registered a year ago, the agency says. It also cites the company’s higher refinancing risk, as the company has 45% of total debt maturing in the next nine months amid a credit shortage.
Brazil Meatpacker Files for Bankruptcy
Brazilian meatpacker Independencia has filed for bankruptcy protection in Brazil and the US amid evaporating liquidity and plant closures. It has some $1.2bn in debt. “The speed and size of these events surprised us and gave us little time to act,” CFO Tobias Bremer says in a Monday conference call. He identifies a reduction in short-term credit lines, export weakness and oversupply in domestic markets as key factors leading to a shuttering of operations last week. The troubled Beef producer, Brazil’s fifth largest, filed for bankruptcy protection in Brazil Friday and the US Monday. It will have 60 days from the acceptance of the filings to present a restructuring plan. The company expects some operations to resume as soon as next week. Bremer expects to receive this month the remaining BRL200m of a BRL450m capital increase from state development bank BNDES. It has a $100m restructured loan from JPMorgan coming due, Bremer says, without specifying when. He declines to comment on whether Independencia plans to make a dollar bond coupon payment due in May. Independencia recently cancelled a tender offer launched in January to buy back up to $145m in its 2015 and 2017 dollar-denominated bonds. S&P lowered Independencia’s debt rating to D from B following the bankruptcy filing. Legal advisors are Wollmuth Maher & Deutsch and Pinheiro Neto. It has apparently not yet appointed financial advisors. Moody’s Monday downgraded Independencia to Ca from B3.
Itau Unibanco Seeks Partner for Redecard
Roberto Setubal, CEO of Itau Unibanco, says his bank is seeking a strategic partner to invest in Redecard, the Brazilian credit card giant. But first, Itau Unibanco plans to raise its stake from just under 50% to a controlling position. Redecard appears to be on a dual track at the moment, as it is pursuing both a stake sale and a public share offering. The company filed Thursday plans with to sell an undisclosed number of shares. “We will participate in the follow-on to try and get a majority stake [in Redecard],” says Setubal on a call with analysts. “We’d like to have a strategic partner or even two to help give the company more support,” he adds, noting Redecard is a business to be shared. The CEO hints that a bank with a credit card business would make an ideal candidate. As part of an existing Redecard shareholder agreement, Itau and Unibanco have the right of first refusal for any new owner for the stake, says a Sao Paulo-based bank analyst at a sellside shop. In order to gain a controlling position, Itau Unibanco would only have to acquire another 5% or so of the company, he adds. It already has a call option on 24m shares, which is roughly 3.6%. Citi’s 17% stake is worth BRL2.72bn at Thursday’s closing price of BRL23.90.
Fitch Turns Negative on Bepensa
Fitch has cut the rating outlook for Mexican Coca-Cola bottler Bepensa to negative from stable, but affirms its BBB foreign and local currency issuer default ratings. The revised outlook is a result of concerns about the declining economic environment in Mexico and the potential negative impact it could have on Bepensa’s subsidiary Financiera Bepensa during 2009. “While Financiera Bepensa has been quite profitable, it represents additional exposure of the company away from its core business, selling soft drinks, juices and water,” the ratings agency says. Bepensa’s financial leverage, as measured by total debt-to-Ebitda, was 1.7x as of September 30, says Fitch. This compares to 1.4x in December 2006. “The portion of this debt that has been with Financiera Bepensa has been increasing, however, as it has grown by about 110% between June 2007 and December 2008. Bepensa’s liquidity remains manageable. The ratio of cash to short-term debt was 0.7x at the end of September 2008,” adds the agency.
Citi to Offload Redecard Stake
Citi, which owns 24% of Brazilian credit card giant Redecard, plans to divest its holdings in the company. Redecard filed a statement Friday with the CVM saying Citi was contemplating a secondary share sale in the public market. A year ago, Citi held 161m shares. It sold 41m in a follow on in March, which leaves it with 120m units. At Friday’s closing price of BRL24.70, a full sale of its shares could generate gross proceeds of BRL2.97bn, though any offer is likely to be done at a discount to the current price, say bankers. In addition, a Wall Street Journal report surfaced Friday suggesting that Itau-Unibanco would seek to acquire the shares as well. The report was unconfirmed. FIG bankers away from the deal speculate any M&A would be advised by each sides’ respective banking units, Itau BBA and Citi. Redecard shares fell 7.5% Friday.
GMAC Mexico Plans ABS
Mexico’s GMAC Financiera is planning to launch an MBS issue in the next two weeks, CEO Mauricio Jannet tells LatinFinance. The details are still being finalized, but the target is MXP620m at a tenor of about 7-8 years. The official says GMAC will follow the Danish model first used in the Mexican market by Hipotecaria Total in its Bonhito program, which allows for the issuance of bonds as the mortgage credits are accumulated, rather than waiting to build a large pool of collateral before issuing. This is the only safe way to do asset-backed issuance in Mexico at the moment to the institutional investor community, Jannet says. “You have to do your homework,” he explains, noting issuers must today provide more in the line of data points and evidence for how the model has worked historically than they have in the past.
Argentina Reopens Guaranteed Loan Swap
The Argentine government has reopened the swap for its guaranteed loans, known as prestamos garantizados. The terms of the deal involve a 2% haircut and the issuance of a new 5-year ARP-denominated bullet note linked to the Badlar rate, which is being called Bonar 14, according to a Barclays report. The government should save some $1.6bn net of the costs related to the new issue, according to the shop. In 2010, the net savings could add up to $400m. Some $2.9bn worth notes are eligible for the swap, including those held by foreigners, says Barclays, which says its view on the sovereign credit remains relatively unchanged in the medium term.
Vitro Says No Immediate Plan to File
Mexico’s Vitro is not aiming to file for bankruptcy at the moment, says a company official. The glassmaker has not made any statement indicating how it plans to handle its restructuring, notes the official, adding a concurso mercantil, the Mexican equivalent to Chapter 11, is not among the leading options being considered. Vitro has hired Milbank Tweed as legal counsel and Blackstone as its financial advisor, while its bondholders have engaged White & Case for legal and Perella Weinberg for advice on financial matters. A banker away from the process says Vitro is also considering bringing in an equity investor to help capitalize the cash strapped company. Last week, Vitro missed coupon payments on its 2012 and 2017 bonds, saying a downturn in the economy and a debilitating derivatives hit has compromised its ability to service debt. It still has outstanding negative derivative positions with a number of investment banks, including Credit Suisse, according to a company official. It must also address discussions with those counterparties in the coming weeks. “The company has pledged full cooperation with the bondholders and says it is willing to sit down and discuss this,” says an executive representing a group of investors.