Category: Corporate & Sovereign Strategy

David Neeleman, the founder and former CEO of US low-cost airline JetBlue and a Brazilian by birth, has garnered commitments from at least seven private equity shops for $150m in financing to start a new low-cost airline in Brazil, say executives close to the matter. Neeleman, who was ousted by JetBlue’s board last year, is set to receive a $70m installment this month and another $70m at the end of the second quarter from a group of private investors to start the operation, which still has no name. A consortium led by Connecticut-based Pequot Capital includes US firms Weston Presidio, Wexford Capital, Peterson Partners, Zweig Associates and Dimenna & Kadon. Brazil’s GIF Gestao is also investing in the venture. Neeleman has put in $10m of his own capital. The plan, say executives close to the process, is to use the equity to lease Embraer-made aircraft and set up the company, which will compete mainly against Gol with the low-cost model. The airline will be based in Sao Paulo and aims to commence operations in early 2009. It wants to serve most major markets in Brazil with as many as 76 brand-new Embraer aircraft by 2013.

The private equity-backed low cost Brazil airline venture from David Neeleman, former CEO of JetBlue, has placed $1.4bn in firm orders for 36 Embraer E-195 jets and has options for another 20 and purchase rights for a further 20, which would bump the total spend up to $3bn. Routes, cities and timing for the as yet unnamed start up are still being worked out, says Gareth Edmonson-Jones, a spokesman for Neeleman. Hughes Hubbard & Reed advised Neeleman while Mayer Brown Rowe and Maw advised the private equity consortium. No investment banks were involved in the process. “Our target market is the 150 million passengers who travel annually by long distance bus as well as those who, for lack of a convenient alternative, don’t travel at all,” says Neeleman. “The Brazilian market is ready for a third major airline and that there is sufficient untapped potential to support all of us,” he adds. Neeleman pledges to make money with fewer passengers than his competitors.

Reinoldo Poernbacher has taken over as new CEO of Brazilian paper manufacturer Klabin. Poernbacher replaces Miguel Sampol, who announced his resignation last week. Poernbacher currently serves as managing director of Klabin’s forestry business unit and the supply chain division, according to the company’s website. He joined Klabin in 1994 and has occupied a number of positions as director in the business units of the company.

An Usiminas official denied rumors that the company’s long-standing CEO Rinaldo Soares would be stepping down after a shareholder’s assembly in May. Contacted by LatinFinance, the official, who asked not to be named, dismissed the rumors as untrue, declining to comment further. A report in Brazilian paper Valor Wednesday speculates Soares will be replaced by Marco Antonio Castello Branco, an executive at the Brazilian subsidiary of French steelmaker Vallourec-Mannesmann.

Itau BBA has plundered Deutsche Bank’s Sao Paulo office, taking four senior executives including CEO of the Brazil business Alexandre Aoude, say people away from the process. Joao de Biase, head of corporate banking, Fabio Dall Acqua, a senior distribution executive and Pedro Nunes also left along with Aoude. Itau is apparently beefing up its fixed income sales and distribution business with the hires. A Deutsche spokesperson was not immediately available for comment.

ING has appointed John Boyles as CEO of wholesale Americas and head of clients. He was previously ING’s head of structured finance, telecom and media finance and has been as the Dutch bank since 1996. He will report to Ralph Hamers, head of wholesale network and succeeds David Hudson.

Chilean retail chain Distribucion y Servicios (D&S) has rejected reports that suggest it is holding merger talks with Wal-Mart. In a statement to the SVS, Chile’s regulator, D&S’s CEO Enrique Ostale Cambiaso says his company had not been in discussions with Wal-Mart, as local paper El Mercurio reported earlier in the day. An Itau report noted last month that the termination of talks between Falabella and D&S – thanks to an antitrust ruling – would pave the way for a resumption of other merger considerations in Chile’s highly competitive retail sector. “D&S may now look at La Polar and/or Ripley to increase exposure in non-food and credit,” said Itau in early February. “Conversely the possibility is now open for Wal-Mart, Casino or Carrefour to make a stab at D&S,” it adds.

The dispute over marketing rights held by Swiss commodities trader Glencore – which has a 35% stake in Xstrata – is the main obstacle to an acquisition, Vale CEO Roger Agnelli confirms, according to wire reports. Vale is “not in a rush” to buy Xstrata and is analyzing other options, according to the reports which follow a Webcast conference Friday. The takeover could cost up to $95bn, but the two sides are understood to be moving apart, despite the fact that Vale has already assembled $50bn in financing. Glencore – which turned Xstrata into a global commodities powerhouse in less than six years – has proven a savvy negotiator, making Vale’s bold takeover attempt a difficult and increasingly expensive proposition. The fact that Glencore is selling at all suggests to some analysts that an acquisition might end up being a huge and costly flop for the Brazilian firm.