Category: Brazil

Brazil’s Banco Bradesco has signed a memorandum of understanding to acquire credit-card issuer Ibi Mexico for an undisclosed amount in cash, according to a bank spokesman. This is not Bradesco’s first deal with Ibi. In June 2009 it acquired Ibi’s Brazil unit for about BRL1.4bn in stock. Similar to the Brazil deal, Bradesco will take over Ibi Mexico’s credit portfolio of MXP1.3bn. The transaction includes execution of a 20-year partnership agreement with clothing retailer C&A Mexico to jointly and exclusively sell financial products and services through the C&A Mexico chain. Ibi Mexico has shareholder equity of MXP566m. A Bradesco spokesman says the bank is still doing due diligence and a final price will be disclosed by the end of March, when the deal closes.

Brazil’s Vale says its wholly-owned subsidiary Valesul has entered into an agreement to sell its aluminum assets, located in the state of Rio de Janeiro, to Aluminio Nordeste, part of the Metalis group, for $31.2m. The assets include an anode plant, a reduction plant, a smelter, industrial services, admin facilities and inventories. Valesul operated an aluminum smelter with nominal capacity of 95,000 tons per year until last March. It then became a small producer of billets for extrusion using purchased primary ingots and scrap as its main raw materials.

Brazilian educational company Kroton is days away from clinching the purchase of 4 schools in the Amazonian Brazilian states of Rondonia and Acre. A company spokesman says a Valor report suggesting the deal is worth BRL600m gives a reasonable idea of the transaction’s scale. He declines to provide a precise number. Itau BBA is advising Kroton on the deal. Kroton has until March 2010 to close the deal, which would substantially boost its size to include 100,000 post secondary students, up from 46,000 in Q3. It would also have 230,000 primary and secondary students.

Despite tough global markets conditions, Minerva has raised $250m in 2020 NC5 bonds through the first single B Brazil deal of 2010. The meatpacker priced late Friday the B/B3 bond at 98.131 with a 10.875% coupon to yield 11.200%, toward the tight end of 11.25% area guidance. The new bond was heard trading around reoffer in the gray late Friday, according to investors. It was likely helped by recent tightening in the outstanding 2017 through 10.00%, investors say, even as much of the market moved the other way. “Given that the market has been trading off and initial guidance was higher, this priced tighter than expected,” says Juan Cruz, head of Latin America corporate credit research at Barclays. “This is not a credit without risk, so for them to price at this level is positive,” he adds. Proceeds are earmarked for refinancing 2010 and 2011 maturities, as the issuer looks to reshape a challenging financial profile that includes 7.7x total debt/Ebitda, the highest of its peers, according to Barclays. Goldman Sachs and Banco do Brasil managed the sale. Minerva’s previous dollar bond was a $150m 9.5% of 2017 sold in January 2007 via Credit Suisse, Santander and Bradesco. It was reopened the following month for $50m. It remains unclear whether the global selloff deters other Latin high-yield issuers in the pipeline, including Marfrig and Vanguarda from the Brazil food sector.

In a well-telegraphed final step in the consolidation of Brazilian petrochemicals, Braskem, Petrobras and Unipar have announced terms on a deal that gives the former control of LatAm’s single largest collection of assets in the sector. The deal, valued at BRL870m in equity plus BRL6.69bn in assumed debt, involves not just Braskem’s purchase of Unipar’s stake in Quattor. It also creates a “new” Braskem that will consolidate ownership of the assets with funds from Petrobras and Braskem’s leading shareholder Odebrecht. In chronological order, the steps to capitalize Braskem include: creation of a holdco called BRK owning 93% of Braskem’s voting shares; direct equity injections into BRK by Petrobras and Odebrecht totaling BRL3.5bn, of which BRL2.5bn comes from the latter and the remainder from the former. This will leave Braskem with control of 54% of BRK and Petrobras with 46%. There will also be a private rights offering to Braskem shareholders worth up to BRL5.0bn, whereby BRL3.5bn will be accounted for by BRK. Once that is done, Braskem will get Unipar’s 60% stake in Quattor for BRL647m. It will also purchase BNDESPar’s holdings in Quattor for BRL170m. Lastly, Braskem will pay another BRL53m for 2 of Unipar’s holdings in Polibutenos and Unipar Comercial. Braskem will pay Unipar in at least 3 installments: BRL50m by February 18; another BRL50m by March 4, and the remaining BRL547m within 5 days after regulatory approval. Quattor’s net debt totals BRL6.69bn, which Braskem will also assume.

LP Healthcare Group (LPHC), a joint venture between US-based investment firms London Pacific and Incite Financial, have agreed to acquire Brazil’s Santos Administracao e Participacoes for $50m cash. Santos is a healthcare system that owns an HMO and a 57% stake in 3 hospitals and 3 clinics. The HMO has 125,000 beneficiaries, London Pacific senior MD Michael Low tells LatinFinance. London Pacific owns 30% of LPHC and Incite the remaining 70%. Closing of the acquisition is expected in Q1. LPHC intends to keep Santos’ current management in place. Santos, founded 53 years ago, generated approximately $173m in revenue and $23m in Ebitdar for the year ended December 31, says LPHC. Low also says this deal, which was privately negotiated, is his firm’s first foray into LatAm and that while there are no concrete plans to expand in the region yet, LPHC will look at any opportunities that may arise.

Barclays says that in light of the recent surprisingly rapid deterioration of fundamental support, and the potential for election pressure, it has changed its USD/BRL forecasts to BRL1.75 in 1 month (previously BRL1.70), BRL1.80 in 3 months (previously BRL1.70), 1.90 in 6 months (previously BRL1.75). It keeps its 12-month forecast unchanged at BRL1.75. The shop adds that December’s employment report reinforces the notion that growth is set to moderate in the coming months. Meanwhile, it says, the current account surprised in December with an almost $6.0bn deficit (versus the $3.6bn deficit expected by consensus), which should be repeated in January. Barclays thinks the current account deficit will rise to around $50bn-$70bn in 2010-11 versus $36bn or so in 2009.

Shareholders in Brazil railroad company MRS Logistica have approved a BRL300m non-convertible debenture issue maturing in 2020. The bonds will pay 1.5% over the DI rate. Banco Bradesco will manage the issue. MRS runs the Southeastern Federal Railroad Network, which connects the states of Minas Gerais, Rio de Janeiro, and Sao Paulo. Its major shareholders are steel producer CSN and iron ore producer MBR.

Brazilian real estate developer Helbor Empreendimentos has signed a BRL1.5bn credit facility with Bradesco, it says. Helbor will use the loan to borrow to fund projects, according to an investor relations official. It will pay TR plus 10.5%-11.5%, depending on use of proceeds. The Sao Paulo-based developer of commercial and residential properties operates in 9 Brazilian states and held an IPO in 2007.

Price expectations on a new $250m 2020 NC5 bond from beef producer Minerva is in the low 11% area, according to investors following the deal. The B3/B Brazilian meatpacker was heard surpassing $600m in orders Thursday, and could price as soon as today. Such a yield may prove attractive to investors seeing overall tightening yields in the Brazilian corporate space, says a European EM investor, if they can get comfortable with 5x-plus leverage. Proceeds from the sale are earmarked for refinancing 2010 and 2011 maturities. Goldman Sachs and Banco do Brasil are managing the transaction.