Category: Chile

Chilean state-owned copper miner Codelco plans to invest around $3.2bn in 2011, up from $2.4bn in 2010 and $2.0bn in 2009. Jose Antonio Alvarez, Codelco’s executive vice president of finance explains that to finance the investment plan, the company will take several approaches. Among them, he tells LatinFinance that the company is negotiating with the government to retain 20%-30% of its annual earnings. Between 2006 and 2009, Codelco retained between 20%-30% of its annual earnings while the rest went to the state, says Alvarez. However, last year because of the earthquake, the government kept 100% of Codelco’s earnings. He adds that this, plus additional capital injections from the government, is equivalent to about $2.0bn per year. Codelco made $2bn net profit in H1 2010. Negotiations with the government on this subject should take place between March and July. Codelco recently sold its 40% stake in power generator and distributor E-CL on the local market and in the US for $1.05bn, a plan which had been among the options it had been considering for the asset since the middle of last year. Codelco hired LarrainVial and JPMorgan, which have been advising it on strategic alternatives, as coordinators. Santander is co-manager. France’s GDF Suez, which holds a 52.4% stake, in addition to a 7.6% free float. The company estimates that it will still need between $500m-$700m. To obtain these funds, Codelco could go to market seeking dollar bonds, but Alvarez says there are no concrete plans to do so at the moment. The company recently obtained a 5-year bullet $100m loan from the Bank of Tokyo-Mitsubishi UJF, says a source with knowledge of the deal without disclosing pricing. Alvarez declines to disclose terms.

EC-L shares sank 5.2% to CLP1,199.70 in the day following a CLP509bn ($1.05bn) follow-on offer that was more than 2x bid. Chilean miner Codelco sold 424.30m shares, or its entire 40% stake, in power company E-CL at CLP1,200.00 each, pricing Friday morning after closing books Thursday night. The price came at a 5.2% discount to Thursday’s CLP1,265.20 what closing price. Total demand hit CLP1.239trn ($668m), E-CL says. Pension funds accounted for 32.8% of the deal, other domestic institutions 18.0%, foreign institutions 26.6%, large non-institutions 8.8% and retail 12.9%. The sale of the asset raises funds for state-owned Codelco’s investment plan, including $1.5bn-$3.0bn this year, and is part of the government’s strategy to meet fundraising needs for earthquake-related reconstruction. France’s GDF Suez still holds a 52.4% stake in the power company, in addition to a 7.6% free float. LarrainVial and JPMorgan managed the sale.

Chilean airline LAN says it is selling courier subsidiary Blue Express to investment holding company Bethia for $54m. A banker off the deal expects Bethia to pay in cash. The target’s book value as of December 31 is $7m, LAN says, which values the deal at 7.7x book. The deal will go through due diligence and is expected to close in 45-75 days. LAN’s financial advisor was Santander, says a company spokesman.

Chile’s Codelco has closed books on the sale of its 40% stake in power company E-CL, with the pricing set to be fixed this morning. The shares closed down 1.2% at CLP1,265.20 Thursday, which would imply a valuation of CLP536.4bn ($1.1bn) for the 424m shares state-owned miner Codelco holds. Investors and analysts expect strong demand for the asset, part of a set of planned privatizations included in the government’s earthquake reconstruction funding efforts. “There should be strong demand from local private and institutional investors and international investors, and they shouldn’t have a problem raising $1.1bn,” Tomas Gonzalez, equity analyst at Celfin tells LatinFinance. With plans for $1.5bn-$3.0bn in capex this year, it does not make sense for Codelco to hold on to its E-CL stake, he says, especially now that it has locked up a long-term power supply contract. France’s GDF Suez still holds a 52.4% stake in the power company, in addition to a 7.6% free float. Proceeds of the sale are marked for Codelco’s investment plans. LarrainVial and JPMorgan are managing the sale, which follows a 3-week roadshow.

SalfaCorp has announced a CLP122.5bn ($249m) capital raise. The structure of the raise will be decided at the Chilean construction and engineering firm’s next shareholder meeting.

Celfin Capital plans to raise a second Chile-focused real estate investment fund. The fund, Celfin Rentas Inmobiliarias II, expects to see commitments of $100m-$150m, with a first closing in April, Rafael Ariztia, investment manager at the Celfin’s asset management unit, tells LatinFinance. He expects to add about $200m-$240m in leverage to the fund. Fundraising has already begun and the Chilean firm is targeting high net worth individuals and insurance companies. The first fund, which closed in 2009, had about $100m in commitments and is carrying $140m in debt. Ariztia says that the first fund, Celfin Rentas Inmobiliarias, is about to make its last investment, but declined to identify the target. The two funds acquire and lease office and commercial real estate. He says that ideally, the new fund will provide returns equal to inflation plus 8%. Ariztia adds that the funds generate stable, recurring revenues. For example, a lease contract on a unit in an office or commercial building can go from a minimum of 2-5 years to up to 15-25 years. Ariztia says the average investment per project is around $60m-$80m, depending on the asset type. The funds invest in Santiago, where overall vacancy rates are around 3.5%. Demand for space is even higher in the city center, with vacancy rates of only 1.0%-1.5%. Celfin has about $295m AUM.

SalfaCorp has announced a CLP122.5bn ($249m) capital raise. The structure of the raise is to be decided at the Chilean construction and engineering firm’s next shareholder meeting.

Chilean holdco Rentas Libra is in talks to 45% of the voting rights, or about 232m shares, in Coca-Cola Embonor. Embonor, a local distributor of Coca-Cola and other beverages, is a subsidiary of Coca-Cola de Chile. The deal is valued at an estimated $923m equivalent including the assumption of debt, according to Dealogic. The acquisition would increase Rentas Libra’s stake in the company to 79%. For the 9 months to September 2010, Embonor reported CLP44.5bn in Ebitda, a 6.1% increase over the same period the previous year, according to company information. The companies were not available for comment.

Shareholders of Banco de Chile have approved a $500m capital increase to boost the balance sheet. The raise was first reported in December. The bank had proposed raising the funds by means of the issuance of cash shares that must be subscribed and paid at the price, term and other conditions agreed to at an extraordinary shareholders meeting.

Chile’s Supermercados del Sur has priced a UF2.5m ($153m) dual-tranche domestic bond issue. The retailer’s UF1.5m 4.10% of 2016 bond priced at 101.41 to yield 4.00%. A UF1m 2029 note meanwhile priced at 101.14 with a 4.70% coupon to yield 4.60%. Supermercados chose not to issue 7.20% of 2015 CLP-denominated bonds or 4.30% 2020 UF bonds, which were also options. LarrainVial led the sale, rated BBB+/A on a national scale.