Category: Corporate & Sovereign Strategy

Alsea, Mexico’s largest food retailer, has secured a loan worth $41.4 million (450 million pesos) from BBVA Bancomer. The money is to be used to refinance debt, in particular short-term obligations, and extend out its debt profile. The composition of the company’s debt is currently 95% short term and only 5% long term. It plans to restructure this so that only 15% has a short tenor and 85% has long-term maturities. Alsea also has operations in Argentina, Brazil and Chile.

Ratings agency Fitch has upgraded the foreign currency issuer default rating (IDR) of Peru to BB+ from BB with a stable outlook. Strong export growth, rising tax revenues, combined with government spending restraint in the first half of the year were all factors that contributed towards the Agency’s decision to upgrade the sovereign. “Furthermore, the smooth political transition that took place in July supports the upgrade, with President Alan Garcia’s inaugural speech and cabinet appointments pointing toward a continuity of the macroeconomic policies that have served Peru so well in recent years”, commented Fitch.

Mexican cell phone operator Iusacell says it has closed its debt restructuring program and succeeded in a 90% uptake by debtholders of its $350 million debt swap offer. In May, the company offered to swap the 14.25% bonds due 2006 for $175 million of new bonds at 10%, maturing in 2013.

Brazil’s largest fixed-line telecoms operator, Telemar, which recently announced it is to pull its planned secondary share offering may well find the terms of its capital restructuring under threat. Brazil’s securities regulator (CVM) has ruled that only shareholders of preferred stock may vote on proposals to reorganize companies because of conflicts of interest. The ruling will strengthen the position of minority shareholders and reduce the power of Telemar’s controlling shareholders in the proposed share swap. 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. However, shareholders of the company’s preferred stock were not happy. For example, in June US money manager Brandes Investment Partners, which holds 8.75% of Telemar’s preferred shares, filed its objections to the share conversion with the SEC, claiming the swap would be against its interests.

Mexican satellite operator Satélites Mexicanos (Satmex) presented a Chapter 11 reorganization plan, Friday, to the bankruptcy court of the Southern District of New York. The restructuring plan has been agreed by at least two-thirds of the company’s creditors and is the final stage of the company’s reorganization following the conclusion of its bankruptcy proceedings in Mexico at the end of July. The underlying bankruptcy agreement lays out that debt will be reduced from around $600 million, including interest, to $375 million, plus capitalization of between $335 million and $350 million, of which $60 million will become working capital. High-yield bonds will account for 80% of total shares and 45% of voting shares; the government will hold 20% of total shares and 55% of voting shares. Non-guaranteed debtholders will swap their debt for shares in the company. The bankruptcy proceedings in the US are likely to take 60 days.

Aluminum producer Alcoa has announced it will shed 570 jobs this month at its AFL Automotive subsidiary in Mexico. The job cuts are part of a restructuring being carried out by Alcoa to improve efficiency in the face of changing market conditions. AFL Automotive, which manufactures auto components for the North American market, employs around 19,000 in Mexico.

Rising government spending this year is pushing Belize to default on its debt, according to ratings agency Standard & Poor’s, which earlier this week downgraded the Central American nation from CCC- to CC, just two notches above a default rating. Belize, which has $960 million of foreign currency debt has said it will move to restructure its international bonds. The country has a debt-to-GDP ratio of 90% and spends over a quarter of its government revenue servicing that debt.