Category: Brazil

Australian-Brazilian nickel mining venture Mirabela has clinched $190m in 6.5-year senior debt from a club of banks, part of a $280m financing that also includes subordinated debt and equity from sponsors. The funding is contingent on sponsors’ ability to raise $95m in additional equity, which has not yet been executed, say people familiar with the deal. The senior loan was originally jointly led by Barclays and Credit Suisse, but they have been joined by WestLB and Unicredit (HVB). The 4 have committed to $40m tickets each. Caterpillar Finance completes the lineup, with a $30m ticket in the senior facility. The all-in cost to the borrower, which includes margins and a liquidity premium, is heard at 575bp over Libor in the 1-year construction period and 525bp over Libor in the remaining 5.5 years. The 6.5 year amortizer has a 2-year interest-only period. Caterpillar has also provided $55m in additional equipment financing. Mirabela was first launched as a syndication the week Lehman failed, and pricing had to be flexed several times. The fact that it closed at all is a testament to the perseverance of the borrower and its banks. Compared to terms at launch in September, Mirabela came up $90m short on the senior debt side and an estimated 300bp wider in pricing. The company’s sponsors committed to make up the difference with an equity injection, which helped secure the bank debt needed to meet the project’s demands. A retail syndication may still take place farther down the line, say lenders, but for now the deal is closed.

S&P has placed Bracol’s B+ long-term corporate credit rating on CreditWatch negative reflecting the recent deterioration of market and credit conditions for the beef sector in Brazil. “Bracol’s weakening credit metrics and the significant acquisition commitments it must pay throughout 2009 put downward pressure on the company’s credit profile,” says S&P credit analyst Flavia Bedran. Bracol’s adjusted total debt was $3.2bn as of Sept. 30, 2008. This follows Moody’s placement of the company’s Ba3 ratings on review for a possible downgrade, which could be of more than one notch. According to the Brazilian foreign commerce secretariat, Brazilian fresh beef export dropped 45% by volume and 68% in USD terms from September 2008 to January 2009, while cattle prices in Brazil only fell about 10% in the same period.

Brazilian oil and petrochemicals company Ultrapar plans to obtain a BRL500m loan from state-run bank Caixa Economica Federal. The 2.5-year facility comes with a 2-year grace period and pays 120% of CDI. Proceeds are for the Ipiranga oil unit’s general corporate purposes, a spokeswoman says.

Rumo Logistica, the logistics unit 71% held by Cosan, is looking to for an equity investment worth some BRL1.2bn to help it expand its network. “Ideally, we’d look to target funds and investors that invest in infrastructure,” says a company official who asks not to be identified. Cosan has hired Credit Suisse to advise Rumo on the auction process, for which a due date for bids has not yet been set. Cosan values Rumo – which owns 2 port terminal facilities – at some BRL910m, with Cosan’s stake worth around BRL650m, says the official, adding that the figures err on the conservative side. Cosan says its unit is to be financially self sufficient, and that the sugar giant does not plan to capitalize or extend intercompany debt. Rumo is looking to execute a 3-part investment, including BRL535m to expand its Bauru-Santos rail capacity in the state of Sao Paulo; BRL435m to acquire up to 79 new engines and 1,108 new cars; and BRL206m to expand port terminals. Rumo’s 2 existing adjoining ports are soon likely to have a combined annual freight capacity of 15m tons, says the official. The company official says now is a good time to invest in Brazilian sugar since share prices are depressed, but sugar prices are heading north following 2 years of decline. Elsewhere in the sector, SantelisaVale is up for sale after having taken on too much debt, while CNAA is pushing ahead with its business plan following a $275m equity capital injection from Carlyle-Riverstone and a $145m 15-year IDB A loan at Libor plus 450bp. BNDES is expected to extend more debt financing to CNAA this year.

Bids to acquire part or all of SantelisaVale, the Brazilian ethanol giant, are due March 16. Several prominent players are looking at making an offer, says a person at the debt laden private company, who asks not to be identified. Among those eyeing an offer are ETH, the ethanol startup company owned by Odebrecht; competing sugar and ethanol company Sao Martinho; agribusiness companies Bunge and Louis Dreyfus; and BTG, the recently formed asset manager and trading boutique co-founded by Andre Esteves. Also heard in the running are GP Investments, Archer Daniels Midland, Cargill and Cosan, according to local press. Itau and Bradesco are advising Santelisa and running the auction. The latter is among the company’s biggest lenders. In 2007 it provided controlling shareholders with a BRL1.5bn credit line to help them shore up ownership of the asset in the face of a takeover bid from Cosan. Santelisa was on track for an IPO in H2 2008 via Bradesco, but was forced to pull out when markets tanked. Goldman Sachs purchased a BRL400m 19% stake in Santelisa in July 2007, though it is not clear if the bank remains an investor.

Telemar is preparing to sell up to BRL3bn in bonds on the local market, pending shareholder approval. The Brazilian telecom, also known as Oi, is considering selling both 2011 and 2012 notes, through its Telemar Norte Leste unit. Shareholders will vote on the plan March 23. Telemar faces bridge maturities from the financing of last year’s Brasil Telecom acquisition, having borrowed BRL3.6bn in 1-year notes in July and BRL2bn of the same tenor in December. Telemar has also been heard considering a dollar bond in March or April, after a $1.5bn issue of 5 and 10-year bonds was pulled in September.

Fitch has cut its outlook on Brazil’s Rede Energia and subsidiaries Celpa and Cemat to negative from positive. Rede, rated B, has $575m in perpetuals, while Cemat and Celpa, also B, have $100m notes due 2012. Fitch notes, “increasing funding pressures to roll over debt amidst the financial market credit crisis,” and says the group presents an inadequate capital structure for the current global scenario of limited credit availability. It also warns of a potential hike in leverage following the revision of the capex budget for the next couple of years. “Difficulties to obtain waiver on certain covenants could lead to a further deterioration in the credit quality of Rede and its subsidiaries with direct negative impact on the ratings,” says Fitch. Rede’s total adjusted leverage remained high, within historical levels, at 5.1x at end September. Rede is one of the largest distribution groups in Brazil.

The World Bank has approved a $1.3bn loan to Brazil to help the country improve its environmental management system. The loan will be disbursed in 2 tranches, one for $800m and the other for $500m. They both have a maturity period of 30 years, a grace period of 5.5 years and are basis Libor. The bank says it is in talks to extend another loan to Brazil, but that amounts or terms have not been set.

Vale’s sale of some 14.9m Usiminas shares for BRL40 each, or a total of about $250m, will provide a modest inflow of cash that will likely be used to support project development, says Tony Robson, equity analyst at BMO Nesbitt Burns. The company says it has budgeted $14.8bn for project development and exploration for this year. Vale’s board has ratified the sale of some 14.9m shares it holds in Usiminas on February 19. On January 29, it had agreed to sell these shares to Japan’s Nippon Steel, the buyer says.

The BNDES has approved a supplementary credit of BRL950m for Alcoa’s Brazilian unit Alcoa Aluminio. The funds follow BRL1.15bn lent in 2007, and will be invested in the aluminum producer’s sites in Northern Brazil. About BRL750m will help fund the construction of a port, railroad and highway supporting a bauxite mine in Para state, with the remaining BRL200m going to help fund a new refining unit in the state of Maranhao. A BNDES official says the credit is for 6-7 years but declines to state the rate.