Bondholders of Brazil’s Rede Energia have welcomed a BRL3.2bn ($1.5bn) offer to buy nine Rede subsidiaries from Companhia Paranaense de Energia (Copel) and Energisa, which competes with a deal proposed last year from CPFL Energia and Equatorial Energia. The proposal is “a viable and much more valuable alternative to the plan Rede has proposed,” according to a statement from a steering group made up of some of the holders of Rede’s 11.125% perpetual notes. Calling the two “well capitalized” and “well qualified,” the group notes that the current plan was designed around a single investor team given the exclusive right to complete diligence as the basis for its proposed investment and that such exclusivity destroys stakeholder value. The new offer from Copel and Energisa includes a payment in cash as well as the assumption of part of the companies’ debt, and Energisa has asked that it be considered at a shareholder meeting scheduled for Wednesday. CPFL and Equatorial made an offer for Rede last year for a symbolic price of BRL1.00 and to the repayment of BRL2.22bn in the bankrupt utility’s debts. Rede filed for bankruptcy last year, and CPFL and Equatorial were given exclusive rights to present a purchase offer, which the bondholder group opposed, noting the existence of other qualified potential buyers.
Category: M&A
Ambev Sees Caribbean, CentAm M&A Opportunities
Companhia de Bebidas das Americas (AmBev) sees potential for further acquisitions in Central America and the Caribbean, following a purchase of a stake in the Dominican Republic’s leading beer brand earlier this year. CFO Nelson Jose Jamel tells LatinFinance that the company believes there are growth prospects both in its home market, as well as in other parts of Latin America. “We do see opportunities moving forward not only to continue growing in Brazil – our home market with 70% of our results and a growing industry with a lot of opportunities – but we also see opportunities to continue growing abroad. The opportunities are more limited today, but particularly in Central America and the Caribbean we think there are a lot of opportunities for future acquisitions,” he says. As the company eyes acquisitions it is also looking at increasing its capex spending in Brazil to accommodate growth, particularly the north and the northeast regions. Ambev’s capex is set to triple this year from its pre-crisis spending in that area. Yet the drinks producer is unlikely to look at the debt markets to finance that, as it has strong free cash flows, Jamel says. Capex this year is expected to come to around BRL3.0bn ($1.40bn), a record for the company, up from BRL2.1bn last year and BRL1.0bn in 2008. In April, AmBev agreed to spend $1.24bn to acquire a 51% position in Cerveceria Nacional Dominicana (CND), and the AB InBev parent was able to negotiate through regulatory challenges to seal a $20bn deal for the remaining 50% of Mexico’s Grupo Modelo.
Mexican Builders Call off Deal
Javer and ICA have canceled a deal announced in December, in which Javer had agreed to acquire homebuilding assets from ICA’s ViveICA unit, the two Mexican companies say. ICA was to exchange the assets and its operating liabilities for a 23% stake in Javer, with Javer taking on responsibility for refinancing MXP600m ($46m) in project debt. Javer was to gain 20 homebuilding projects throughout Mexico. Having not reached an agreement, ICA says it will keep developing its current housing projects for the time being. “The company will also seek near-term opportunities to carry out transactions involving these assets that generate value,” ICA says.
Falabella Enters Brazil
Chilean retailer SACI Falabella has entered a new market in LatAm, through a Brazilian acquisition seen as small compared to its bottom line, but offering significant growth potential down the road. Falabella’s Sodimac home improvement unit has agreed to buy a majority position in Brazil’s Dicico for BRL388m ($190m), Falablella says. In the deal it will acquire 50.1% stake in Construdecor, which operates the Dicico chain of home improvement stores. Some BRL319m will come through the issuance of new Construdecor shares, and the remainder through the sale of shares from existing holders. The Chilean will rely on its own cash, as well as possible debt financing, to fund the purchase. The remaining 49.9% is in the hands of CEO Demitrios Markakis, who remains in his role. Credicorp Capital sees the transaction implying a price/sales ratio of 0.98x, based on Dicico’s 2012 sales of $384m. It finds this ratio “fair,” coming within the 0.5x-1.2x range of other acquisitions within the country. “Though marginally relevant in terms of valuation today, we believe it was the right step for the company for the long term, granting Falabella the opportunity to build out its Sodimac format with the Brazilian market,” Credicorp says. The shop says Brazil’s home improvement market is about 6x larger than Chile and somewhat fragmented, which presents “interesting” long term growth potential. Dicico booked sales of BRL789m in 2012. Falabella operates department stores, home improvement stores, supermarkets and shopping malls in Chile, Argentina, Peru and Colombia. Falabella made its debut in the international debt market last month, raising $750m in a transaction that included the first-ever global-CLP tranche from a corporate borrower. The Dicico deal is credit neutral for Falabella, Fitch says.
No Fear on Long-Term Investment: AmBev
Brazil’s AmBev is considering further acquisitions and growth, saying difficult markets are no reason to cut investments
BCI Looks to Markets to Fund US Buy
Banco de Credito e Inversiones (BCI) will look to issue shares or bonds after agreeing Friday to buy City National Bank of Florida in the US from Spain’s Bankia for $883m, it says. The Chilean bank calls the deal a “natural step in increasing business abroad,” and notes that it should close in the first quarter of 2014. City has $4.7bn in total assets, compared to BCI’s CLP17.57trn ($35.91bn). The buyer does not give any specifics as to the financing plans, but it has demonstrated access to the USD markets, most recently with a $500m 2023 bond sale in February, through Citi and JPMorgan. LXG Capital, Landmark Capital and Whitecap advised BCI, and Goldman Sachs advised Bankia on Friday’s deal.
PdVSA Brings in Foreign Funds
As the markets wait to see how Venezuela’s new presidential administration will secure international funding, state-owned oil producer PdVSA has agreed to new debt financing from three sources. PdVSA and Russia’s Rosneft have agreed to form a joint exploration venture in Venezuela, the two say, which includes a $1.5bn loan to PdVSA. The Petrovictoria crude oil and natural gas exploration and production joint venture is to be 40% owned by Rosneft and 60% by PdVSA’s Corporacion Venezolana del Petroleo (CVP) subsidiary. CVP will get the $1.5bn loan, and Rosneft also says it will make a $1.1bn payment in two installments to enter the JV, without giving additional details. The joint venture will as part of the Carabobo-2 project move forward the pair’s development of heavy oil reserves. Carabobo-2 North and Carabobo-4 West blocks are included in the project, with reserves estimated at 40bn barrels, Rosneft says. Separately, PdVSA has agreed to a $2bn loan from Chevron, to support the Petroboscan JV the two have, according to local news and wire reports citing remarks from Oil Minister Rafael Ramirez. The loan pays Libor+450bp, though no details on maturity were immediately available. Also, PdDVSA has agreed to a $1bn revolver from US oil services company Schlumberger. Officials at the companies were not available for comment on the terms of the JV or any of the financing.
Prudential Fibra Adds Properties
Terrafina, the Fibra Mexican real estate fund established by Prudential Real Estate Investors, has agreed to buy $600m worth of industrial property from two American managers. Kimco Realty and American Industries have agreed to sell the fund 87 properties located throughout Mexico, Terrafina says. The sale is expected to close in the third quarter. Terrafina raised $765m-equivalent through an IPO in March, and indicated it would go after acquisitions in the $750m-$1.25bn range. Thursday’s deal adds to a portfolio of 146 industrial properties.
Slim Sheds Tobacco Stake
Grupo Carso has agreed to sell its 20% stake in Philip Morris Mexico (PMM) to Philip Morris International (PMI) for approximately $700m. The value was derived from a previously agreed formula, and may be adjusted based on performance during the next three years, the Carlos Slim holding company says. The move marks the end of a 30-year investment in the operation. PMI claims more than 70% of the market in Mexico. Carso did not use an advisor on the deal, according to a spokeswoman, and PMI spokespeople did not respond to a request for comment.
ICA Looks to Trim Airport Stake
ICA is planning to raise as much as $400m from the sale of shares in Grupo Aeroportuario del Centro Norte (OMA), it says. The Mexican construction company’s Aeroinvest subsidiary has registered a shelf to sell as much as 100m shares, or a 25% stake, of the airport operator. A sale of the full amount would raise MXP4.709bn ($386m) if done at Thursday’s MXP47.09 closing price. Once approved by regulators, ICA could sell the shares at any time during a 3-year period.