Arcos Dorados has launched a $1bn follow-on and could price as soon as Wednesday, but news that the LatAm McDonald’s franchise is venturing forth has so far failed to raise expectations for more ECM activity through to year-end. Arcos holders plan to sell 40.4m secondary shares, which would raise $1.07bn at Monday’s $24.12 close if a 10% greenshoe is included. A successful deal would restate the case that equity market is open for follow-ons from well-known issuers – if there are any in need of funds – after TIM Participacoes sold a BRL1.72bn ($1.01bn) follow-on October 4. “TIM and Arcos were very specific situations, as they are companies doing well even in this challenging environment. But you don’t have many stories like that available,” says a Sao Paulo-based ECM banker, who expects few or no deals for the remainder of 2011. The sellers of the Arcos Dorados shares are private equity funds linked to DLJ, Capital International and Gavea, which bought McDonald’s LatAm operations along with Arcos controller Woods Staton in 2007. They are looking to take advantage of the success of a well-demanded $1.25bn April IPO and subsequent strong aftermarket performance. Bank of America Merrill Lynch, Credit Suisse, Citi, Itau, JPMorgan and Morgan Stanley are managing the Arcos follow-on sale. This is the same bank group that led the IPO – the region’s only IPO to price above its target range this year.
Category: Equity
Quinenco Set for Capital Raise
Quinenco has approved a CLP225bn ($446m) capital increase, through an equity rights offering. The Chilean conglomerate controlling holdings of the Luksic family is raising funds for its participation in the capitalization of shipping company Compania Sud Americana de Vapores and other projects. Earlier this month Vapores announced a $1.2bn capital raise, with Quinenco contributing $1bn to help turn around the struggling shipper.
Arcos FO Seen this Week
Arcos Dorados is expected to price an equity follow-on as soon as this week, raising speculation that other strong issuers could also follow suit. Private equity stakeholders in the McDonald’s operator are taking advantage of the success and strong aftermarket performance of the $1.25bn April IPO to sell a to-be-determined amount of secondary shares. Some of the region’s better-known companies could also soon file follow-ons to ready themselves for the opening of any windows before year-end. IPOs, however, are another story and are unlikely to emerge until 2012, bankers say. Arcos Dorados filed with the SEC at the beginning of the month for a $50m deal, but that number is not binding and size is expected to be much larger. The sellers include funds linked to DLJ, Capital International and Gavea, which bought McDonald’s LatAm operations along with Arcos Dorados controller Woods Staton in 2007. Bank of America Merrill Lynch, Credit Suisse, Merrill Lynch, Citi, Itau, JPMorgan and Morgan Stanley are managing the Arcos follow-on sale. This is the same bank group that led the IPO – the region’s only IPO to price above its target range this year.
Mexico’s Explores MILA Partnership
Mexico’s stock exchange is interested in exploring operational partnerships with the Peruvian, Chilean and Colombian bourses making up the Mercado Integrado Latinamericano (MILA). The Bolsa says no agreement has been made yet, but there are possibilities for investments or a strategic alliance. Executives from the Lima and Bogota exchanges have said that tie-ups with Mexico and Panama would be a logical next step for MILA. These types of expansions and the improvement of the existing cross-listing platforms are top priorities in the next five years.
Pemex and Sacyr United in Repsol Bid
Despite falling just short of having sufficient shares to take control of Repsol, Pemex and Sacyr-Vallehermoso are keeping their agreement to pool their resources in their bid for the Spanish oil firm. Together both companies now hold 29.5% of Repsol, putting them within spitting distance of the 30% required for a full takeover bid. The Mexican state-owned oil producer and the Spanish construction company agreed in August to pool their voting power to obtain maximum representation on Repsol’s board. Pemex has doubled its position to reach 9.49%, but is still shy of the 9.8% stake it committed to in the agreement. This comes after Pemex retapped its 6.5% 2041s last week for another $1.25bn, pricing it 102.131 to yield 6.339% or 315bp over. The bonds closed at 104.625 mid market Friday after strong day in the credit markets.
Swedes Finish with 98% of Chile’s CTI
Swedish home appliances maker Electrolux has reached 97.79% ownership in Chile’s Compania Tecno Industrial (CTI), following the close of a tag-along offer. Electolux bought 64% of its Chilean peer in August for $691.5m equivalent from Sigdo Koppers, and has now spent an additional $570m equivalent. It offered investors the same CLP34.87 ($0.07) per share for remaining CTI shares and CLP325 per share for CTI’s listed Somela unit. CTI is to be consolidated into Electrolux this month.
Telebras Plans Rights Offer
Telecomunicacoes Brasileiras (Telebras) will offer existing shareholders the right to buy up to BRL300m ($171m) in new shares. Telebras is obliged to make the offer following an injection of capital by the Brazilian government, and has until June of 2012 to make the offer. The Brazilian government announced a plan last year to revive the one-time telecommunications monopoly and use it as the vehicle to expand broadband internet services in Brazil, investing BRL3.22bn over four years.
BRICS Set Up Exchange Alliance
Brazil’s BM&FBovespa has agreed to form an alliance with the Hong Kong, Johannesburg, Moscow, Bombay and Indian National exchanges. Together, these markets represent a combined listed market capitalization of $422bn, a monthly trading volume of $422bn as well as 9,481 listed companies. Initially the exchanges will cross-list benchmark equity index derivatives on alliance member boards, but they are expected to later develop more innovative products to track the combined BRICS exchanges.
Eike Ups OGX Position
Brazilian magnate Eike Batista has raised his stake in his E&P company OGX to 62.45%. The billionaire bought structured notes equal to 46.8m shares, or a 1.45% stake. At Tuesday’s BRL12.29 closing price, the additional shares would be worth BRL575m ($329m).
AMX Starts Telmex Tender
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.