Mexican telecom giant America Movil kicks off today its tender offer to buy the Telmex shares it already doesn’t own after receiving regulatory approval to move ahead with the operation. This comes after the company wrapped up fixed-income investor meetings in Europe late last week via Deutsche Bank, suggesting it may try its luck in the euro bond market if conditions are ripe. Indeed, markets Monday certainly adopted a risk-on stance after Germany and France showed a united front and pledged to put together a plan to support European banks and tackle the continent’s debt crisis. DCM and EM debt trading desks in New York were closed Monday for Columbus Day, but US stocks leapt a good 3% and AMX watched its shares bounce a 4.2% on the Nasdaq. In August AMX said it would spend up to MXP76.34bn ($6.51bn) to buy back Telmex stock and was offering MXP10.50 per share for the approximately 7.2m shares. At the time, the company calculated that the offer represented an 11.1% premium over the average share price of the 30 days prior to announcement. The telecom has sufficient cash on hand to fund the tender, which is expected to expire on November 11, but it has also been raising debt to cover a portion of the operation. It was last in the market in late August when it sold a $2bn 5-year bond and a $750m retap of its 2040s a week ahead of a September rush that never happened. The company most recently tapped European investors in late August via Credit Suisse, with a CHF270m ($350m) 2016 that came at a reoffer price of 99.775 to yield 2.039%, or mid-swaps plus 86bp. Deutsche Bank, HSBC and BNP Paribas, brought AMX to the European markets in June 2010 with EUR/GDP bond transactions. At that time, it priced a EUR1bn 2017 at 99.276, with a 3.750% coupon, to yield 3.870%, or mid-swaps plus 135bp, as well as a EUR750m 2022 at 98.902, with a 4.75% coupon, to yield 4.873%, or mid-swaps plus 175bp.It also raised GBP650m through a 2030 that was priced with a 5.750% coupon, to yield 5.
Category: Equity
Arcos Holders Plan Selldown
Restaurant operator Arcos Dorados is planning a follow-on offer of secondary shares owned by private equity funds. Funds linked to DLJ, Capital International and Gavea, which bought McDonald’s LatAm operations along with controller Woods Staton in 2007, are looking to sell shares. Exact timing and amount are still to be determined. Bankers say that some of the region’s stronger more well-known companies could soon file follow-ons so that they are ready to take advantage of any window that opens up before the end of the year. This comes as shares of Arcos Dorados jumped about 3.48% on the New York Stock Exchange Monday to hit $24.67 as stock markets surged on hopes for a resolution to the European debt crisis. Bank of America, Credit Suisse, Merrill Lynch, Citi, Itau, JPMorgan and Morgan Stanley are managing the sale. The LatAm McDonald’s franchisee raised $1.25bn in its IPO in April, through the same group of leads. This was the only deal in the region this year to price above its target range. At present Gavea holds9.3%, DLJ 2.9% and Capital International 7%.
Locacao Prepares to Go Public
Brazil’s Companhia Locacao das Americas has registered with local regulator CVM to become a public company. In June, the vehicle outsourcing specialist raised BRL160m ($100m) through a bond in Brazil’s local markets. The 2014 pays the DI plus 2.5%, and amortizes equally in 2013 and 2014. BTG Pactual managed the sale, done under the rule 476 restricted format.
EEB Launches Follow-on
Empresa de Energia de Bogota has launched a COP700bn ($360m) equity follow-on. The Colombian utility is offering 538.5m shares at COP1,300 each through October 27. The per share price represents a 1.1% discount to Thursday’s COP1,315 close. EEB plans to use the proceeds from the offering to fund its expansion plans. Corredores Asociados is lead manager.
PacRu to List in Brazil
Pacific Rubiales has initiated the process to list Brazilian Depositary Receipts on the Sao Paulo stock exchange, it says. The move will allow the Colombian oil and gas explorer, already listed in Toronto and Bogota, to broaden its investor base. No new shares will be issued as a result of the process.
Uruguay Farmer Cancels Equity Increase
NZ Farming Systems Uruguay (NZS), a New Zealand-listed Uruguayan dairy farmer, has cancelled plans to raise $120m in equity capital through a rights offering, it says. The company’s decision comes after minority holders indicated their disapproval ahead of a November vote on the matter. As an alternative, NZS says it will seek to upsize an existing $85m loan to $110m and extend its term. The loan is from Olam, a Singapore-based agricultural firm which owns 86% of NZS.
HSBC, JPM Lead DCM Tables
HSBC leads the regional DCM tables through the first 9 months of 2011, according to Dealogic, with JPMorgan topping the list if only cross-border transactions are included. Bankers are unsure if there will be much more issuance to add to those totals before year-end, noting that if volatility doesn’t settle down within the next month, there will likely be no new cross-border deals until January. HSBC maintains the overall lead it held at this time last year, with $9.34bn from 67 deals, of which $4.2bn from 48 deals came from domestic markets. JPMorgan is second ($9.26bn from 34), followed by Bank of America Merrill Lynch ($8.93bn from 40). JPMorgan’s $8.79bn cross-border volume from 31 deals, leads that ranking, followed closely by BAML ($8.72 from 38) and Deutsche Bank ($5.99bn from 26). JPMorgan also led in fees, with $40m. Total regional DCM volume hit $89.3bn in the period, just shy of the record $91.0bn from the same period in 2010. ECM may have even bleaker prospects to add to its volumes, currently led by Itau’s $3.18bn from 24 transactions. “It is tough to believe issuers would want to expose themselves to these conditions,” says a banker at a rival shop. He sees few if any new deals before the end of the year, noting a reopening of LatAm ECM would require a European debt resolution, a reduction in volatility, a return of the US IPO market and a reverse in fund flows. Trailing Itau in the first 3 quarters of 2011 are BTG Pactual ($2.10bn from 13) and Citi ($2.00bn from 14). Itau’s $79m in fees are also tops. ECM Issuance in the period is down 44% to $26.1bn, from $46.7bn last year.
Vapores Set For $1.2bn in Fresh Funds
Shareholders of Compania Sud Americana de Vapores have approved a $1.2bn equity capital increase, to shore up the Chilean shipper as it confronts higher oil prices and lower shipping tariffs. The move follows a similar $500m equity increase in July, and is accompanied by a $350m credit line. Grupo Luksic’s Quinenco is contributing $1bn of the capital hike, with Maritima de Inversiones financing $100m and remaining shareholders the $100m. Vapores also approved the spinoff of the company’s port and logistics unit.
IGS Splits CCD to Afores’ Tastes
Mexico’s IGS has raised MXP1.80bn ($78m) in the certificado de capital de desarrollo (CCD) market, splitting the transaction into 2 separate CCDs to accommodate different investors’ interest in different projects. In what is a first for Mexico’s young CCD asset class, the real estate investor is issuing MXP575m in a 2021 CCD that will be more focused on industrial real estate assets, and MXP513m in a second to be more focused on residential investment. “Late in the process we had an impasse. Some Afores wanted more of one asset than the other, so we decided to make 2 CCDs,” Antonio Ruiz Galindo, CEO of IGS, tells LatinFinance. He explains that a good deal of the investments will still go to both CCDs. The CCD funds will account for part of a larger pool that is made up of 47% private investor cash and about 5% IGS’ own capital, to invest in residential, commercial and industrial real estate projects in Mexico. The industrial investments will be sale-leasebacks on existing properties, while the residential assets will be land to be used for low-income housing supported by government Infonavit and Fovissste. The commercial investment comes from a deal with Homex to develop the commercial spaces within the low-income residential developments. As much of the pipeline is ready, Ruiz says he expects 30% of the fund to be invested within 6-8 months. In a structure typical of CCDs, investors earn a return to repay their invested capital plus a preferred return, in this case 12%, with further proceeds divided 80% for investors and 20% for the manager. IGS expects overall returns of 18% for the industrial investments, 20% for commercial investments and 22% for residential investments, according to the prospectus. ING managed the sale, the first CCD placed since April. Bankers are hopeful that issuance will again pick up, noting the pause was mostly due to discussion with Afores regarding funding CCDs via capital calls, rather than the problems in the public equity markets. Se
Brazilian ECM Shows Life with TIM Follow-on
Brazilian wireless operator TIM has raised BRL1.72bn ($925m) in Brazil’s first equity deal since July, though bankers and investors doubt the follow-on signals a revival. TIM placed 200.3m primary shares, including a 9.5m share greenshoe, at BRL8.60 each, according to the CVM, representing a 0.92% discount to Tuesday’s BRL8.68 closing price. Parent Telecom Italia had indicated it would exercise its rights to 66.94% of the sale, meaning only about a third of the deal hit the markets and filling the books was not a huge concern. “This wasn’t going to be a difficult deal to place, as the parent is taking its share,” says a New York-based ECM banker away from the deal. He notes that the deal unfortunately doesn’t signal a revival for Brazilian issuance, due to the poor performance of the Bovespa and global equity markets, as well as the challenges issuers were already facing this year to get the prices they wanted. Analysts had called the follow-on unnecessary, citing TIM’s low debt levels. The wireless operator is raising funds to expand its infrastructure, after having spent BRL1.6bn in the July purchase of broadband provider AES Atimus. Itau and Morgan Stanley managed the follow-on. There are no other Brazilian deals that are launched at present, with several issuers pulling their initial filings in recent weeks. Bankers are optimistic that maybe a few new deals could still arrive in 2011, though investors don’t see them pushing clients out in current conditions, with the Bovespa having lost 25% year-to-date. “The pipeline is huge, but nobody is going to look at a new deal with [secondary market] prices at levels like this,” says a Sao Paulo-based investor.