Category: M&A

LatAm targeted M&A volume totaled $109.6bn in 2007, up 15% from 2006, according to Dealogic. Acquirers outside LatAm accounted for 41% of the volume, compared to 48% in 2006. Citi led by volume in the region, for both announced ($32.4bn) and completed deals ($43.8bn). EM market volume was up 43% at $909.1bn, while global volume rose 23% to $4.83trn. LatAm bankers expect slightly less M&A business this year.

Basic Energy Group’s acquisition of Jamaica Energy Partners (JEP), owner of two power barges in Jamaica, for $92.5m from Conduit was financed using equity and debt, according to the buyer. The debt was provided by Citi and BNP Paribas advised the seller, while Basic used no advisor. In addition, Basic Energy assumed JEP’s debt with the IFC. JEP has been funded since inception with long-term financing from the IFC. It operates under a long-term contract with Jamaica Public Service, the privately-held utility. Basic Energy is a power company with activities in the Caribbean and Latin America. It recently took a controlling stake in Pedregal Power in Panama and is developing a number of renewable energy projects, including a wind farm in the Caribbean.

Basic Energy Group’s acquisition of Jamaica Energy Partners (JEP), owner of two power barges in Jamaica, for $92.5m from Conduit was financed using equity and debt, according to the buyer. The debt was provided by Citi and BNP Paribas advised the seller, while Basic used no advisor. In addition, Basic Energy assumed JEP’s debt with the IFC. JEP has been funded since inception with long-term financing from the IFC. It operates under a long-term contract with Jamaica Public Service, the privately-held utility. Basic Energy is a power company with activities in the Caribbean and Latin America. It recently took a controlling stake in Pedregal Power in Panama and is developing a number of renewable energy projects, including a wind farm in the Caribbean.

GE Energy Financial Services plans to invest $54m and co-finance the acquisition of a ship drilling for oil in deep water off the coast of Brazil. GE says this is its first equity investment in offshore drilling. GE Capital Markets is an MLA on $259m in associated senior debt facilities along with WestLB, which is also an MLA. GE Transportation Finance joined with GE Energy Financial Services in underwriting the debt. The funds will facilitate Mike Mullen Energy Equipment Resource’s acquisition of Peregrine I, a deepwater drill ship under contract with Petrobras, from a subsidiary of Houston-based Transocean. A subsidiary of Etesco Construcoes E Comercio, an experienced Brazilian offshore rig operator, will operate the vessel under a contract with Petrobras. Mike Mullen Energy Equipment Resources, a Dallas-based offshore assets investor, and Pareto World Wide Offshore, a Norwegian private equity fund, are also investors in Peregrine I. The Peregrine I is drilling in the Atlantic Ocean off the coast of Brazil and rated to drill in 5,200 feet of water to a depth of 25,000 feet.

GP Investments has agreed to buy stakes in four human resources companies in Brazil for BRL100m . The deal will combine Soma Gestao de Servicos e Desenvolvimento de Recursos Humanos, Soma Staffing Trabalho Temporario, Top Service Servicos e Sistemas and People Domus Assessoria em Recursos Humanos into a single operation to be 77.5% owned by GP. The balance will be held by the Grupo Soma’s original shareholders. The transaction is being funded through the GP Capital Partners IV fund.

Brazil’s Grupo Votorantim launched Friday a $1.3bn 3-piece syndicated loan to take out two bridge facilities it raised with WestLB and Citi for acquisitions done in recent months. The deal faces rough market conditions and liquidity constraints that are forcing lenders to reconsider pricing, even for investment grade blue chips like Voto. While the spread is wider than what the company would have got just six months ago, it is several basis points tighter than some market participants expected given the external storm. The deal consists of a $1bn pre export facility with 5-year and 7-year maturities and a $300m 3-year working capital facility. The spread on the trade-related 5-year portion is 72.5bp over Libor, tighter than the 80bp-100bp bankers not on the transaction had predicted given the market. The 7-year pays 82.5bp and the 3-year 55bp over Libor, say bankers familiar with the terms. Leads WestLB, Citi, Societe Generale and BBVA hope to clinch an MLA tier by early January, at which point the loan will be launched to retail. The acquisitions funded recently include Aleris’ US zinc operations, Prestige Group, also US-based, and Colombian steelmaker Acerias del Paz.

The Argentine private equity group led by the Eskenazi family that is acquiring a stake in YPF, Argentina’s largest energy company, has reduced the size of the acquisition loan it is taking out for the purchase to $1bn, from $2bn, according to bankers away from the deal. The YPF stake is now heard at 14.9% instead of 25.0%. Bankers away from the process say it is a combination of factors that include feasibility of the financing and regulatory issues. On one hand, raising $1bn in acquisition finance is far more manageable than the original $2bn size. And on the regulatory front, acquiring a stake of 15% or more in Argentina appears to require additional procedures with existing shareholders that could slow the process, says a banker. YPF also said Tuesday that it would seek shareholder approval for a $1bn bond offering in a meeting scheduled for January 8.

Moody’s has placed Brazilian meat producer JBS under review for possible downgrade, following concerns about the company’s fast-paced acquisition strategy while it straightens out the operations of Swift, which it acquired in July. “Continued low operating margins at Swift may make it a challenge for JBS to maintain consolidated retained cash flow to net debt above 10%, which is the level that we consider necessary for the current rating category,” says Moody’s. The agency is also concerned that a recently announced partnership with Cremonini will further strain JBS management’s capacity control operating performance at its multiple international operations. JBS has a B1 rating.