Category: Brazil

Brazilian car-rental agency Localiza has announced a 1-year share buyback program of up to 5.86m, or 5.8%, of its outstanding shares, it says. It has also concluded early its previous 1-year program, which had been set to expire December 17, in which it bought back 4.22m out of a possible 4.50m units. Localiza shares closed Tuesday at BRL5.61.

Brazilian aviation major Embraer is expected to name Luiz Carlos Aguiar its CFO, effective January. The former Banco do Brasil banker is currently Embraer’s executive VP for the defense and government market. He will replace Antonio Luiz Pizarro Manso, who has CFO of Embraer since 1995.

Brazil’s government has awarded three packages of transmission lines totaling BRL1bn to connect renewable energy production in the states of Mato Grosso do Sul and Goias, electricity regulator Aneel says. Spain’s Cobra won the rights to build and manage 793km of lines, requiring an estimated investment of BRL357m. The Brazilian unit of Spanish utility Elecnor got a 616km package valued at BRL225m. Transenergia, a subsidiary of Electrobras, won the third lot, totaling 635km and requiring an estimated investment of BRL206m. The lines are expected to be completed by 2010 and will connect 27 bagasse-fired and small hydroelectric generators to the national energy grid. While not small, Monday’s auction, merely serves to whet appetite for Thursday’s auctioning of transmission capacity connecting the Rio Madeira hydroelectric projects in the Amazon region. Aneel plans to put up 6 packages totaling 2,375km that should require BRL7bn-BRL9bn in investment and receive significant funding from development bank BNDES.

Brazilian Ricardo Villela has been elected Felaban president for 2008-2010, succeeding Fernando Pozo, general manager of Ecuador’s Banco del Pichincha. Villela is the president of LatAm operations at Banco Itau Holding Financeira and was recently designated president of Young Global Leaders, a partner of the World Economic Forum. In his speech at the Felaban meeting being held in Panama over the weekend, Villela called on banks to work toward improving and expanding access to financial services for individuals and enterprises.

Banco do Brasil has agreed to buy majority control of Banco Nossa Caixa for BRL5.39bn. The government-owned bank will pay BRL70.63 per share for a 71.2% stake in Nossa Caixa, owned by Sao Paulo state. The price is a 38% premium to Nossa Caixa’s previous closing price of BRL51.30. BdB will pay BRL299.2m in monthly installments beginning in March. Merrill Lynch and UBS advised BdB, while JPMorgan and Morgan Stanley helped Nossa Caixa. The deal follows seven months of negotiations, but may have picked up more urgency following the announcement of the Itau-Unibanco union at the beginning of the month. BdB is also heard to be in advanced talks to acquire a 49% stake of Banco Votorantim, in a bid heard valuing the entire institution at around $6bn, further boosting its market position. With the Brazilian bank market “clearly defined,” as Bradesco CEO Marcio Cypriano recently told LatinFinance, opportunities for more big acquisitions may be limited.

Invitel, the indirect controlling shareholder of Brasil Telecom, plans to sell BRL950m in 180-day promissory notes. It aims to pay interest of DI plus 4.5%, and use proceeds to repay 1-year promissory notes maturing at the end of the month. Itau is managing the transaction, with Santander, Banco do Brasil and Unibanco as co-managers. The banks are offering a firm guarantee and will hold the notes if there is insufficient demand. Invitel has 99.99% of the shares issued by closely-held Solpart, which in turn owns 51.41% of the voting capital of BrT Part, controller of Brasil Telecom. Brasil Telecom agreed to be acquired by Telemar in March for about BRL13bn, in a transaction still awaiting legal approval.

Brazil’s central bank has approved plans to lend up to BRL500m to farmers through development bank BNDES. The lines of credit will be available to famers in the center-west region of the country to refinance up to 40% of debt maturing in 2008. The funds come with a maturity of 1-3 years, at rates ranging from 7.00% to 10.25% per year.

Bradespar, the equity investment arm of Brazilian bank Bradesco, is planning to sell up to BRL1.4bn in 3-year debentures in the local market, pending the approval of shareholders November 28. It is aiming to lock in a pricing at 106% of DI. Proceeds will refinance a BRL1.4bn 180-day promissory note issue taken out in June, which also pays 106% of DI. Bradesco and UBS are managing the sale.

Brazilian steelmaker Usiminas plans to sell up to BRL1bn in 2020 debentures following shareholder approval. It expects the notes to pay the DI rate plus 0.75%, and amortize in three installments in 2018, 2019, 2020. It does not indicate the use of proceeds or who the managing banks would be. Selling a 12-year tenor to local investors under present market conditions will be a very tall order. It marks a significant leap from the recent domestic markets trend of big-name corporates being restricted to 1-2-year tenors.

Brazilian companies continue to take advantage of fallen share prices by repurchasing their own stock. BRMalls is among the latest and plans to buy back 7m shares, or 10% of the outstanding total, over a one-year period. The shopping mall manager’s shares closed Monday at BRL7.00. Power generator Energisa has also filed for a one-year program to repurchase up to 6.7m shares, noting they are “undervalued and lacking liquidity.” Energisa closed Monday at BRL6.60. Banco Cruzeiro do Sul plans to buy back up to 10% of its float (3.6m shares) in the next 60 days. The mid-size bank’s shares closed Monday at BRL4.36.