Category: Corporate & Sovereign Strategy

Preferred shareholders of Brazil’s largest fixed-line telecoms operator, Telemar, have voted against the company’s proposed capital restructuring claiming it would be against their interests. In April the company revealed it was to restructure its share capital and unite stock from its various companies into a single class of new voting shares. Two previous meetings, slated for November 13 and then November 24 were both cancelled for lack of quorum. The vote by preferred shareholders was in line with a ruling earlier this year by CVM, Brazil’s securities regulator, that only shareholders of preferred stock may vote on proposals to reorganize companies because of conflicts of interest.

Following the announcement Wednesday by Belize that it will offer to exchange most categories of its foreign commercial debt for new dollar bonds, ratings agency Standard & Poor’s Thursday lowered its long-term foreign currency sovereign credit rating on the country, this time to selective default (SD) from CC/C. Last month the agency downgraded the rating from CCC- to CC, just two notches above a default rating. The agency said it had also revised its long-term foreign currency ratings on the bonds in the debt swap proposal to D, but affirmed its CCC+/C local currency sovereign credit rating on Belize. The government of Belize Wednesday said it would seek approval of the National Assembly for a debt swap offer which, if approved, would be launched later this month. The Government is proposing to issue New Bonds that will mature in 2029, with principal payments commencing in 2019. According to a government press release: “The New Bonds will bear interest in the first three years after issuance at a fixed per annum rate of 4.25%. In years four to five, the rate will increase to 6.00%, and thereafter through the maturity of the New Bonds the interest rate will level off at 8.50% per annum. All coupons will be paid in cash on their respective due dates.”

The new president of Ecuador, Rafael Correa, is worrying investors, some of whom predict an Argentina-style debt restructuring. “I’m concerned about it,” said Art Steinmetz, who manages more than $4 billion in EM debt for OppenheimerFunds, speaking at an EMTA panel in New York. “I’m in the bear camp,” chimed in James Barrineau, analyst at AllianceBernstein. David Rolley, co-head of global fixed income at Loomis Sayles said a haircut similar to Argentina’s 70% was possible and added that he does not hold any bonds. The only positive note was from Simon Treacher, EM portfolio manager at BlueBay Asset Management, the hedge fund. “I’ve never held a defaulted asset,” Treacher told the panel, adding “I’m very long Ecuador.” The 20-year market veteran said that he’d taken off his CDS protection on the credit Wednesday.

Brazil’s largest fixed-line telecoms operator, Telemar, has cancelled a planned shareholders’ meeting for the third time, signaling continuing problems with its proposed capital restructuring, say analysts. Shareholders are due to vote on the restructuring plan. In April the company revealed it was to restructure its share capital and unite stock from its various companies into a single class of new voting shares. Preferred stockholders have strongly objected to the share conversion, claiming it would be against their interests. Two previous meetings, slated for November 13 and then November 24 were both cancelled for lack of quorum.

Brazil’s largest fixed-line telecoms operator, Telemar, has moved closer to realizing its planned capital restructuring after Brazilian telecoms regulator Anatel approved the plan, Friday. In April the company revealed it was to restructure its share capital and unite stock from its various companies into a single class of new voting shares. A shareholders’ meeting is slated for today, November 13, at which the plan will almost certainly be approved. However, not all shareholders are happy. Preferred stockholders have strongly objected to the share conversion, claiming it would be against their interests and have tried stalling Monday’s meeting.

US carmaker Ford has announced that Barry Engle, president of its operations in Brazil and Mercosur, is moving to help support with the company’s restructuring program in North America and will be replaced by Marcos de Oliveira, effective December 1. Oliveira will report to Dom DiMarco, president of Ford South America, executive director for Canada and South America.