SMU approved the appointment of controller Alvaro Saieh as president, the Chilean supermarket operator says, a move aimed at bolstering investor confidence. The billionaire can be more actively involved in the retailer’s turnaround from the position. Following disclosures this year of accounting errors that led to a breach of debt covenants, SMU has been executing a plan that includes a number of store closings, asset sales and a focus on lowering costs. Saieh put up $300m in fresh equity last month and SMU will raise another $200m by 2016. Troubles at SMU have pushed up borrowing costs at Saieh’s CorpGroup. The financial group was expected to announce as soon as this week an agreement to merge the CorpBanca operation – most likely with Itau or BBVA.
Category: Chile
CFR Sweetens SA Bid
CFR Pharmaceuticals has increased its cash and stock takeover offer for South Africa’s Adcock Ingram by 1.6% to ZAR12.8bn ($1.23bn), it says. The Chilean’s offer is up from ZAR12.6bn and comes as it faces competition from South African conglomerate Bidvest, who has increased its holding in Adcock to 6.8%. CFR’s bid comes at ZAR74.50 per share, up from ZAR73.51, and contemplates ZAR6.4bn-ZAR8.2bn in cash, and ZAR4.6bn-ZAR6.3bn in CFR shares. CFR claimed the support of shareholders holding 53% of Adcock as of last month. It needs to reach 75% for success, and a pension fund holding 19% has come out against the deal. CFR says it has a $600m bridge loan ready to go from BBVA, Santander Chile, Bancolombia and Bank of America. Credit Suisse is advising CFR, with IMTrust providing an evaluation of Adcock shares. Deutsche Bank is advising Adcock, with JPMorgan providing a fairness opinion. The deal is expected to generate revenue and cost synergies of up to $440m, would see Adcock delisted from Johannesburg, where CFR would have a secondary listing. In addition to the bridge funds, CFR is preparing a $750m equity capital raise.
Masisa Ends Investor Meetings
Chile’s Masisa has ended fixed-income investor meetings ahead of a potential bond debut, with no announcements heard as of Friday afternoon. The BB rated producer of wood products visited Lima, New York, Los Angeles, Boston, New York and London through Friday. Deutsche Bank, Itau, JPMorgan and Scotiabank are managing. CFO Carlos Toro told LatinFinance in January that Masisa could look to issue a 5-year or 10-year bond this year of $200m-$250m. Proceeds would be used for refinancing the company’s outstanding debt. In September, Masisa raised UF2m ($94m) in a domestic bond transaction that was 2x oversubscribed.
Banco del Estado Offers Sub Bonds
Banco del Estado de Chile has issued UF2m ($88m) in 30-year subordinated domestic bonds, according to people following the sale. The bonds priced at 101.99 with a 3.50% coupon to yield 3.39%, or government bonds plus 80bp. The sale saw four times demand. Next week, Sociedad de Rentas Comerciales is expected to sell UF1m in the Chilean market, with the proceeds to be used for refinancing and investments.
Chile Holds Rates
Chile’s central bank decided to hold rates at 4.5% when its central bank met Thursday, in line with market expectations. “Our trading partners are growing somewhat below their historic average, but a recovery is expected in the coming quarters, grounded on the rebound of developed economies, especially the United States, and the stabilization of emerging markets,” the bank says in a note. The bank cut rates 25bp at its November meeting, following a surprise cut of 25bp at its October meeting.
Foreigners Close in on CorpBanca
CorpBanca may be close to a sale of a stake, perhaps even a majority position, to a foreign bidder. The Chilean bank says it is in discussions to pick the winner and structure the deal – noting that controller Alvaro Saieh’s group will keep “a relevant position,” in the financial group. Itau and BBVA are the likely options, with the Brazilian saying it in is in discussions. If Itau emerges the winner, it is expected to take a majority state, as bank a official earlier said publicly Itau had no interest in a minority position. CorpBanca had a market cap of $4.51bn as of Thursday. Bank of America Merrill Lynch is advising CorpBanca on the sale process, done to strengthen its position at a time when Siaeh is facing pressures at his SMU retailer. Saieh has said no funds from the sale would go directly to SMU.
Chilean Hybrid Gets $3.6bn Demand
Chilean utility AES Gener has raised $450m in new junior subordinated hybrid bonds, with demand topping $3.6bn, according to people following the sale. The 2073 NC5.5 priced at par with an 8.375% coupon to yield tight to 8.500%-area guidance and earlier 9.000%-area talk. The bond traded 102.6-103.3 Wednesday afternoon, according to a trader. Gener’s coupon is reset after 5.5 years and every five years thereafter by floating rate. Interest payments are deferrable at the company’s discretion. The bonds receive 50% equity treatment by Fitch. Italian utility Enel’s subordinated 2073 NC10 bond, trading to yield 7.40% Tuesday, was seen as the most appropriate comp. Citigroup and Goldman Sachs managed the 144a/RegS transaction, rated Ba2/BB/BB, below the issuer’s Baa3/BBB/BBB minus senior rating. The bond raises funds for the generator to finance equity contributions to the Alto Maipo hydroelectric and Cochrane coal-fired generation projects in Chile. Gener closed this week a $1.2bn 20-year syndicated loan to fund the 531-megawatt Alto Maipo. The IDB, IFC, CorpBanca, Banco del Estado de Chile, BCI and Itau Chile, and KfW and DNB make up the lending group. Cochrane was funded through a $1bn 17-year package closed in April.
Gener Prepares to Test DCM
AES Gener has released 9%-area initial price thoughts for a junior subordinated hybrid bond pricing as soon as today, according to people familiar with the issuer’s plans. The Chilean generator plans to sell $450m in the 2073 bonds, and possibly become the first of the group of borrowers roadshowing in recent weeks to complete a deal before the end of the year. Others in the pack include Hochschild Mining, Idesa, Trinidad and Tobago and the Bahamas. Argentina’s YPF is meeting investors this week in the hopes of getting a deal done next week. Citi and Goldman Sachs are managing the Gener transaction, rated BB. The bond should allow the Chilean power generator to raise funds to finance its equity contributions to the Alto Maipo hydroelectric and Cochrane coal-fired generation projects, as well as to repay upcoming maturities. It was approved for a $450m equity capital raise in August. The hybrid notes will receive a 50% equity credit, Fitch says, given that interest payments on the notes are deferrable at the company’s discretion. Also, the notes’ subordinated ranking provides loss absorption for more senior indebtedness of the company.
Moody’s Cuts Gildemeister
Moody’s has downgraded Automotores Gildemeister to B1 from Ba3, it says. The agency notes a continued deterioration of Ebitda margins and high capital expenditures that pushed the Chilean auto distributor’s total debt-to-Ebitda to 7.7x times during the 12 months through September. This was up from 3.5x times the year before, it says. The deal should remain above 6.0x in the near future. The outlook is negative. The move follows Fitch’s downgrade to B last week.
Chilean Property Manager Plans Local Sale
Sociedad de Rentas Comerciales plans to raise up to UF1m ($44m) in Chile’s local bond market, according to people familiar with the matter. The property company has finished a roadshow and plans to issue as soon as next week. The borrower can choose among a 7-year UF-denominated tranche with a 3-year grace period and a 3.50% coupon, a 6.5% 7-year peso-denominated tranche with a 3-year grace period, and a 4.0% 21-year tranche with a 10-year grace period. Half of the funds raised are expected to be used to refinance long term liabilities and the other half to finance the issuer’s investment program. IMTrust leads the sale, rated A/AA minus on a national scale.