Eike Batista is offering to buy up all of the outstanding shares of Brazil’s LLX Logistica, LLX says, aiming to delist the unit and to give minority holder Ontario Teachers Pension Plan (OTPP) a greater stake. He is offering BRL3.13 ($1.54) per share, representing a 25% premium to the BRL2.50 average price from the 20 day period prior to the announcement. Shares closed Monday at BRL2.96. OTPP, LLX’s second-largest holder after Batista, also plans to take part in the buyout of other shareholders, which could top BRL600m, in order to increase its own stake. LLX does not give an indication of the timing of the offer. The stock is down 12.2% this year, and other companies in the EBX family have also been suffering losses. The move towards a strategic partner and away from the public markets is consistent with the trend at EBX, which this year has put off a public listing and sold more than $2bn in private stakes to the Mubadala sovereign wealth fund and to GE.
Category: Equity
Contax Approves BNDES Debt
The board of Contax Participacoes, an outsourcing operator that counts Oi among its controlling shareholders, has approved the issue of BRL253.4m ($138m) in domestic bonds, Contax says. A BRL126.7m 2018 inflation-linked tranche pays 6.5% and is convertible in to shares after two years at the holder’s discretion. The conversion price is BRL32.00 per share, or the stock’s 22-day trading average plus a 50% premium, whichever is less. The shares closed at BRL21.51 Monday. A second tranche is identical in size and tenor, but is not convertible into equity and pays the TJLP+1.5%, tightened from an originally planned TJLP+2.5%. Contax plans to use proceeds to execute its 2011-2013 investment plan. BNDES is managing the sale, and its BNDESPar arm has agreed to purchase the bonds.
La Polar Gets More Time
Creditors have extended Chilean retailer Empresas La Polar’s deadline to raise CLP120bn ($249m) in equity to October 29, it says. The capital raise is part of an agreement to restructure $900m in debt accepted by creditors in November, which helped the company avert bankruptcy. In June of last year, La Polar disclosed it overcharged clients for past-due store credit card bills and was setting aside nearly $1bn in loan-loss provisions.
Vulcabras CEO Exits, Patria Deal Off
Brazilian shoemaker Vulcabras and private equity firm Patria Investimentos have dissolved an agreement to negotiate an equity investment, Vulcabras says, by mutual agreement. The two had started talking about a possible deal in May. Also, Vulcabras’ CEO Milto Cardoso dos Santos has resigned, for personal reasons. He is replaced as CEO in the interim by Chairman Pedro Bartelle.
Endesa Plans LatAm Streamline
Spain’s Endesa plans to consolidate its LatAm holdings into its Enersis subsidiary, in a transaction structured as an $8.02bn equity capital increase, it says. In an attempt to simplify the structure of the Spanish energy company’s generation, transmission and distribution holdings in the region, Endesa plans to contribute to Enersis the stakes it holds in 13 South American businesses, including subsidiaries of Enersis as well as Endesa subsidiaries not held through Enersis. Other shareholders of Enersis would be invited to subscribe for a matching proportional increase, payable in either cash or by contributing their stakes. The value of Endesa’s position in Enersis was valued at $4.86bn, or 60%, by an independent audit. In addition to simplifying Enersis’ structure, Endesa is looking to reduce in the gap between its Ebitda and net income, as well as reduce dividend leakage within the Enersis group. The operation could also increase the liquidity of Enersis shares, and give it more cash to continue making acquisitions and developing projects in the region. Enersis plans to hold a shareholder meeting on September 13 to approve the plan, which could become the largest capital increase in the country’s history. Enersis’ shares dropped more than 13% Thursday on the news of the plan, with analysts questioning the company’s valuation of the assets and showing concern it might overpay.
Brazilian Lands Follow-on
Mills Estruturas e Servicos de Engenharia has raised BRL108m ($53m) through an equity follow-on, according to a source familiar with the sale. Shareholders in the Brazilian engineering firm sold 4.1m shares Friday through a sale process known as an accelerated book build, at BRL26.10 per share. The price represents a 1.2% premium to the previous day’s BRL25.80 close. BTG Pactual managed the sale. Mills closed at BRL26.20 Monday.
Foreigners Boost Chilean IPO
Chile’s Inversiones La Construccion (ILC) has priced a CLP227bn ($469m) IPO, falling short of a $500m target but still becoming the largest-ever Chilean equity debut. Hooking more international investors than expected, the investment arm of the Camara Chilena de la Construccion (CChC) priced 3.7m primary and 28.5m secondary shares at CLP7,061 per share, according to the Bolsa. Total demand was CLP1.085trn, with competitive demand accounting for CLP555.85bn, according to the company. Foreigners buying into the 144a portion accounted for 35% of the sale. “This is a much higher portion of foreign participation than we expected,” says a banker managing the sale. The healthcare sector in LatAm is a popular one among investors, though ILC’s structure as a holdco for different types of businesses made it something of a challenging sell to those not familiar with Chile’s market. Local institutional and other non-retail buyers accounted for another 35% of the sale, with buyers linked to ILC making up 20% and 10% ending up in the hands of retail buyers. ILC is a holdco for health insurance firms including AFP Habita and Consalud and the Tabancura and Avansalud clinics. The secondary shares in the transaction are sold by CChC, which should maintain a 67% position in ILC. ILC is raising funds to capitalize its health care operations and for organic growth and acquisitions. Bank of America Merrill Lynch, IMTrust and JPMorgan managed the sale. The deal tops a $398m offering for Inversiones Aguas Metropolitanas in 2005 to become the largest in Chile’s history, according to Dealogic data. The shares closed Friday at CLP7,238. ILC brings to a close a week of mixed results in the LatAm IPO market, with Brazil’s Biosev pulling and Brazil’s Taesa and Mexico’s Vesta getting deals done. There is one more debut in the region scheduled prior to the traditional August hiatus, as Chilean construction firm Echeverria Izquierdo plans to raise about $100m-euqivalent in an August 3 sale.
Vesta Thinks Ahead to Additional Equity
Following last week’s $250m-equivalent IPO, Mexico’s Corporacion Inmobiliaria Vesta could eventually return to the equity market to raise approximately $200m more, CEO Lorenzo Berho Corona tells a small group of reporters in New York. The industrial real estate specialist would likely wait about a year and a half before returning to the markets, and would also be open to domestic and international debt. He says Vesta is satisified with last week’s sale, in which investor demand was aided by increasing optimism for Mexico’s economy following this year’s change in government. “The demand we found was pretty much on the lower side of the range,” Berho says, noting they were much more concerned with the quality of the book than with size. Vesta priced at MXP19.00, versus a MXP19.00-21.00 range. He says the books were distributed 68% to Mexican investors and 32% to international buyers. He notes that the transaction received 1.4x demand, which is “pretty good for these days.” Despite concern in the international markets, he notes investors find Mexico attractive and that Vesta still sees room in Mexico to grow. “We see that the opportunities are really just starting,” he says of Mexico’s commercial real estate sector.
ILC Ready for Debut
Chile’s Inversiones La Construccion (ILC) was expected to emerge today with pricing on an IPO targeting about $500m-equivalent. Books closed Thursday afternoon, with the sale heard at least 3x covered, according to a person close to the deal, and receiving better demand than expected from foreign accounts. ILC, the investment arm of non-profit Camara Chilena de la Construccion (CChC) is a holdco for health and health insurance firms including AFP Habita and Consalud and the Tabancura and Avansalud clinics. It is offering 3.7m primary shares and 28.5m secondary shares to be sold by CChC, which should maintain a 67% position. “The company has an ample national presence, which reaches close to 78% of the population through its different business lines. Its main subsidiaries, insurance and health care, operate in sectors with a growing number of users and adequate regulatory framework,” CorpResearch says in a report. The sale would raise CLP235bn ($485m) if done at CorpResearch’s recommended purchase price of CLP7,300. ILC is raising funds to capitalize its health care operations and for organic growth and acquisitions. Bank of America Merrill Lynch, IMTrust and JPMorgan are managing the sale, which includes both a local and a 144a portion. ILC follows last week’s pricing of $67m-equivalent IPO from Chilean berry exporter Hortifrut.
Taesa Recharges Equity Market
Brazil’s Transmissora Alianca de Energia Eletrica (Taesa) has priced a BRL1.76bn ($876m) equity sale, landing in the middle of the price range, in a deal that saw a far easier time than most Brazilian offerings this year. Investors signed up for close to 5x the shares on offer, according to sources familiar with the sale, drawn in by Taesa’s track record, dividend payments and the view that it enjoys more favorable regulatory conditions than others in Brazil’s electricity universe. “This is a defensive stock, and it stands out from a regulatory perspective. It’s a concession without surprises,” says a Brazilian portfolio manager looking at the deal. In the “re-IPO,” the Cemig transmission unit sold 27m units at BRL65.00 per unit, according to the CVM, the midpoint of a BRL60.00-BRL70.00 range. The unit total indicates the use of both a 15% greenshoe and 20% hot issue. A unit consists of one ordinary and 2 preferred shares. Brazilians accounted for about 50% of the demand, with 30% coming from the US, 10%-15% from Europe and the remainder from LatAm ex-Brazil and Aisa, according to bankers on the deal. The proceeds from the all-primary share sale are to be used for investments and expansion. Taesa pays a minimum of 50% of net profit in dividends, and says it paid 93% of net profit in dividends during the 2006-2011 period. In April, it approved a BRL428.5m payment, equal to BRL4.88 per unit. Bank of America Merrill Lynch, BTG Pactual, Banco do Brasil, Goldman Sachs and Santander managed the sale. Cemig had planned to improve Taesa’s float and raise funds through the sale since purchasing the Brazilian transmission assets of Italy’s Terna in 2009. Taesa becomes the only Brazilian equity transaction targeting the July-August pricing window to complete successfully. The others – IPOs for Pague Menos, Biosev, CPFL Energia, Manabi and Vix Logistica – are waiting for better market conditions later in the year.