Nicaragua has negotiated a deal with almost all of its creditors for a whopping 95.5% haircut on $1.4bn in debt. From the overall amount of eligible claims of $1.4bn, more than $1.3bn was tendered and accepted for redemption by Nicaragua at 4.5% of the current value of the claims. Participation by financial institutions exceeded 99% and included all of the vulture funds holding the sovereign, according to the debtor. The operation was implemented with a grant from the World Bank’s Debt Reduction Facility, financed by contributions from Finland, the Netherlands, Norway, Russia, Sweden and the UK, as well as from the net income of the IBRD. Closing is scheduled to take place mid-December. “The high level of debt relief of 95.5% requested by Nicaragua was necessary and in line with the principle of equitable burden sharing among creditors under the Heavily Indebted Poor Countries Initiative,” says Nicaraguan finance minister Alberto Guevara. “The government of Nicaragua is extremely pleased with the outcome of this cash tender offer which has been conducted in a fully transparent and collaborative manner,” he adds. Lazard Freres was financial advisor and Cleary Gottlieb legal advisor to the government. The offer to holders of Nicaragua’s public external commercial debt was launched October 10. The sovereign defaulted in the early 1990s and has been dogged by creditor litigation ever since. However, investors have failed to collect on judgments.
Category: Corporate & Sovereign Strategy
Argentina’s Fargo Works Out Debt
Argentina’s Compania Alimentos de Fargo has reached a debt-restructuring agreement with its primary creditors, according to Mexican baker Grupo Bimbo, which has an equity stake. The agreement includes the payment of 33.81% of the debt and a commitment by the bondholders to work with Fargo to end the legal injunction under which the Argentine baker has been operating since June 2002, Bimbo says. The creditors comprise the investment funds Rainbow Global High Yield, The Argo Capital Investors Fund SPC, Argo Global Special Situations Fund Segregated Portfolio and The Argo Fund Limited. They have agreed not to take any further legal actions against Fargo, says Bimbo.
The 20th Anniversary Gala Dinner
For two decades, LatinFinance has been the most respected and reliable commentator on the financial and capital markets of Latin America. And over these years LatinFinance has developed ongoing relationships with an elite group of the region’s key market participants – CEO’s and CFO’s of companies and banks, leading investment bankers, central bank governors, ministers of finance,
and investors the world over.
Reconstructing Odebrecht
Brazil’s foremost global engineering firm is restructuring itself and spinning off new ventures in energy, agriculture and real estate. Financing expertise will feed its success.
CVRD Cuts the CRD
Brazilian mining powerhouse CVRD has changed its name to Vale as part of what it calls a “new brand and new communications positioning.” Donning a white hard hat, CEO Roger Agnelli made the announcement Thursday to about 500 managers from around his expanding empire. They were gathered in Rio auditorium and entertained by an enthusiastic drum-banging, singing and dancing troupe. The new logo – a warped green and yellow ice cream cone – is designed to bring the iron ore producer “closer to people,” says the firm. The new positioning and brand “highlight the fact that Vale produces essential ingredients for daily life, supplying, with its iron ore production, the raw material for several products like computers, watches or stoves,” adds the entity formerly known as CVRD. “With its new visual identity the company aims to consolidate its image as a Brazilian company with global action, highlighting its distinctive position in the international landscape,” the firm’s PR machine gushes. Bankers hoping for business from the frequent issuer are advised to abolish immediately the following from their lexicon: “Companhia Vale do Rio Doce,” “Rio Doce,” and the acronym CVRD.
Cosan Tries to Appease Minority Shareholders
Cosan drew harsh criticism from shareholders, the CVM and the Bovespa after its seemingly impudent shareholder restructuring and NYSE IPO in August. But it is apparently throwing minority investors of its Bovespa-listed entity a bone with an offer for more influence. At a shareholder meeting scheduled for Sao Paulo December 5, Cosan’s controlling shareholder Rubens Ometto Mello, who shored up his control over the company via an August US listing, will offer minority shareholders the option to vote on and participate in any acquisitions or investments the US-listed entity, Cosan Ltd, makes outside Brazil. They are excluded from this today. The measure marks an improvement for the snubbed minority equity holders. But it ultimately fails to change the fact that they are powerless if the company were offered a takeover deal by a suitor. Furthermore, “if the idea was to give Cosan SA’s shareholders access to international opportunities, this solution only gives them the right to have a non-controlling stake in such an investment,” says Itau Corretora in a report.
Guatemala’s G&T Rejects Sale Talk
Guatemala’s G&T Continental has categorically denied that it is being acquired, in response to rumors of a takeover. “Grupo Financiero G&T Continental is not for sale,” says the bank’s CEO, Flavio Montenegro. “It will be maintained as the bank of preference for Guatemalans, the leading entity in Guatemala and the most important in Central America, thanks to the support and trust of its clients,” he adds. HSBC is understood by Guatemala City-based bankers to be working on an acquisition of the financial institution, amid ongoing interest in the sector from foreign banks. “They’re doing due diligence,” says a banker. However, G&T rejects talk of an offer from HSBC as “totally false.”
GOL Draws Private Equity Interest
Brazil’s GOL Linhas Aereas has received approaches from private equity groups interested in a 30% percent stake, according to wire reports. CEO Constantino de Oliveira told a press conference in London that the approaches are “very preliminary” and adds that Brazil’s largest airline is not actively seeking investment. GOL said in September that it is considering going private or initiating a share repurchase program. And on October 5 it forecast 2007 per share profit would be almost 50% less than earlier predictions, citing a range of BRL1.60-BRL2.10 a share, down from BRL3.00-BRL3.50.
Bayly Replaces Morales at BCP
Walter Bayly has been appointed CEO of Banco de Credito del Peru (BCP), effective April 1 2008, to replace veteran banker Raimundo Morales. “It’ll be a tough act to follow,” Bayly tells LatinFinance. “He has a strong leadership within the bank and in Peru,” he adds. Bayly, currently CFO, has been part of the BCP management team for more than 10 years. Alvaro Correa, head of the offshore operation, will take on his role. Gianfranco Ferrari, head of the Bolivian operation, has been appointed central manager of retail banking, while Diego Cavero will become general manager for Bolivia. To support the transition, Jose Luis Gagliardi will advise the CEO. Morales steps down after 17 years in the position and 27 years at BCP. “He will remain closely linked to [BCP holdco] Credicorp,” says Bayly. The exact role Morales, 61, will have at the bank is unclear, but a board seat and an honorary title is a likely outcome. Carlos Muñoz, deputy CEO, will also retire in March 2008. BCP reported record results for the end of September, including PES717.6m net profit and an ROE of 33.5%. “These results compare favorably with profits of PES498.5m, and an ROE of 25.4% for the same period last year,” says the bank. Bayly says he does not anticipate any strategic changes at BCP.
Carlyle Bolsters Brazil LBO Business
Carlyle has tapped Fernando Borges, CEO of AIG Capital Investments do Brasil, to spearhead its new Brazilian LBO business, a senior person close to the initiative tells LatinFinance. Earlier this year Borges led AIG’s effort to acquire Providencia Industria e Comercio, a Brazilian textile manufacturer for $432m. Three other investors, including Banco Espirito Santo and the Constantino family, which controls Gol Linhas Aereas, also participated in the deal. Carlyle has a buyout group in Mexico and real estate business in both Mexico and Brazil, the latter headed by Eduardo Machado. To date, LBOs in Brazil have been hampered by elevated interest rates and a reluctance from local executives to add leverage. Some domestically run shops, including GP Investments, have begun using bank debt to acquire assets this past year, though leverage ratios are not seen rising past four or five times. Ana Vigon, managing director and head of LatAm private equity of AIG Capital Partners in New York, is expected to replace Borges.