Category: Central America

Swiss food giant Nestle has agreed to acquire a majority stake in Guatemalan food company Malher. A spokesman for the companies declines to reveal the transaction value and the size of the stake being acquired. “The 2 companies competed in the same market and will now join forces,” he explains. The spokesman adds that Nestle will be able to benefit from Malher’s extensive distribution chain, which reaches other Central American markets, the Caribbean and North America. Malher, best known for its Malher, Yus and Toki powder-based drinks, was established over 50 years ago and employs about 1,300. The spokesman says there were no financial advisors involved. Nestle has had a presence in CentAm for the past 70 years.

The IMF says it has concluded the third review of Guatemala’s economic performance under a program supported by an 18-month stand-by arrangement (SBA) approved in April. The SBA amount is $927.2m. With the completion of this review, about $865.4m is available for drawing. “Performance under the program has been strong. All end-December 2009 and end-March 2010 quantitative performance criteria were met comfortably, and inflation stayed within the inner consultation band agreed in the program. The 18-month SBA with the fund is expected to remain precautionary,” the IMF says.

Moody’s has upgraded Nicaragua to B3 (stable) from Caa1. The agency cites improvements in the country’s main debt metrics as a result of international debt forgiveness. Nicaragua’s debt to GDP fell from over 130% in 2003 to an estimated 45% this year. However, Moody’s also says that Nicaragua’s low economic development remains a key long-term ratings constraint and that subdued long-term growth prospects and institutional concerns also constrain ratings.

Canadian start-up miner Tahoe Resources is buying the Escobal silver project in Guatemala from subsidiaries of Goldcorp for $505m. The price for the pre-development project includes a minimum of $230m in cash and 40% of the fully diluted Tahoe shares issued through a scheduled IPO. Tahoe announced Monday that it has filed a preliminary prospectus with Canadian authorities to launch an IPO through GMP Securities as sole bookrunner and Genuity Capital Markets. Funds raised will be used for the cash portion of the Escobal purchase as well as engineering studies and exploration. Closing of the transaction is anticipated on or about June 8. Tahoe is a start- company that aims to acquire, explore and develop precious metals resource properties in the Americas.

AEI has closed a $350m 10-year term loan for construction of the 300MW Jaguar Energy Guatemala power plant, after tapping mostly regional lenders. The developer formerly known as Ashmore had sought a $500m A/B loan in 2008. But after waiting out the global credit crisis, it launched in December a single-tranche $350m 10-year loan paying Libor plus 575bp. It is led by Bancolombia and Cabei. Participants are: Guatemala’s Banco Industrial, G&T Continental, Banco Reformador and BAM, as well as HSBC, Panama’s Banco General and Costa Rica’s Bicsa. “With the regional banks we were able to have group of sophisticated lenders who could deliver quite fast,” Luis Alfredo Turizo, director of corporate finance at Bancolombia tells LatinFinance. The deal also features participation from the Biba Inversiones de Capital investment fund, administered by Bancolombia with commitments from Colombian pension funds. Turizo says this is the first fund of its kind under new legislation allowing for such investment. The project also counts on a $200m deferred payment financing from China Machine New Energy (CMNE), the contractor on the project. The facility is subordinate to the $350m loan, and is payable on project completion and convertible into equity at AEI’s option. CMNE is the first Chinese contractor to win an engineering, procurement and construction contract in Central America, says Turizo. Tickets on the loan were $10m-$50m, he adds, with the lead arrangers each committing $66.5m. The Jaguar plant near Puerto Quetzal has a 15-year power purchase agreement with local distribution companies owned by Spain’s Gas Natural, and should be online in 2013. Turizo says he expects to see more such regional lending groups in Central America.

With funding costs at attractive lows and an infrastructure pipeline to develop, Guatemala is considering its first dollar bond since 2004, finance minister Juan Alberto Fuentes tells LatinFinance. “We are evaluating possibilities. This year would be ideal and Guatemala is capable,” the official says. Congress should approve soon a plan allowing the government to issue $500m in the international markets, he says. A tenor has not been decided, though 10 years would be a likely possibility. Bankers in Cancun for the IDB meetings say that the Central American issuer is a good candidate to tap and there are plenty of shops pitching. Fuentes says proceeds of the sale would help fund infrastructure investments the government has planned including roads, ports and airports. The sovereign, rated BB+/Ba2/BB, does not have maturities to refinance until 2011. It also has good access to multilateral lines. Fuentes highlights the fact that Guatemala was one of the few economies in the region to grow in 2009. It expanded by 0.6%, owed to a reliance more on food exports as opposed to durable goods shipments. He expects 2% expansion in the economy this year. An improving picture in the US would also help remittances boost the economy. While conditions in the US have improved since last year, Fuentes does not see unemployment falling significantly in the short term.