Cencosud, Chile’s largest retailer by sales, has agreed to buy Brazilian supermarket operator Bretas for BRL1.35bn. Of the price, BRL1bn is due at closing, BRL100m at the end of 2011 and BRL250m at the end of 2014. The buyer says a BRL182m adjustment will be made for financial debt and working capital. According to Reuters, which cites the buyer, it will finance the purchase through bank debt totaling $290m, and the rest funded by cashflow. The target is a privately-held owner of 62 supermarkets, 3 distribution centers and 10 service stations in central and northern Brazil. It is controlled by the Duarte De Assis family, employs about 10,000 people, had sales of BRL2.1bn last year and may generate revenue of BRL2.5bn this year, according to Cencosud. “With this strategic acquisition Cencosud enters the states of Minas Gerais and Goias, consolidating its relevant position in the Brazilian supermarket market,” says the Santiago-based retailer.
Category: Chile
Edenor Gets 80% in Liability Management
Endenor says it has received $116.7m (78.5%) in outstanding 10.5% of 2017 bonds from the market, via repurchase and exchange offers expiring at the end of the month. The Argentine electric distributor has received acceptance from holders of $30.6m (20.6%) for direct repurchase, and $86.1m (57.9%) in exchange for new 9.75% 2022 bonds. The offer is funded by the sale last week of an additional $140m of the new B2/B minus 9.75% 2022 NC8 bonds, which priced at par. “Given the company’s quality and the favorable technicals, we think these notes could easily go to 104-105 very rapidly, post issuance,” Barclays says in a report, despite the fact that the new notes priced at the tight end of the initial 9.75%-9.875% guidance. In the offer launched October 3, Edenor was offering the new 9.75% of 2022 bonds, at rate of $1,030 principal per $1,000.00 tendered, plus a $70.90 cash bonus if done by October 15, or at $1,030 principal plus $50.90 cash if done by the November 1 expiration. The alternative option was a full cash payment of $1,060 per $1,000 principal if done by October 15, or $1,045 if done after. Deutsche Bank, JPMorgan and Standard Bank are managing the process.
Molymet Hits Equity Road
Chile’s Molymet has launched investor meetings ahead of its November offering of a 10% stake on the domestic stock market. The metals processor expects to raise more than $200m in the sale, which is designed to increase the liquidity of its float and raise funds for expansion. The tour will also include a US and European portion. The Gianoli, Mustakis and Matte families, who hold 96% of Molymet, have waived their priority rights to ensure a broad sale to the public, the company says. Banchile Citi and IM Trust are managing the sale, for which the issuer has not set an exact date. Molymet’s 4-year expansion plan is aimed at fulfilling growing demand for molybdenum, a copper byproduct used to strengthen steel, as the world economy recovers and steel consumption grows in Asia. Molymet shares closed Friday at CLP12,350.
Chile Tightens Policy Rate
As expected, Chile has tightened its monetary policy rate by 25bp to 2.75%, slowing from the 50bp hike seen in the past 4 months. The central bank says in a statement that the domestic market has seen robust growth in line with expectations. Bank of America Merrill Lynch says in a research report that the reduction in the pace of hikes is also brought by the appreciation of the CLP, which it forecasts will strengthen to CLP500 per USD by the end of 2011 from the CLP530/USD level it expects to see in December 2010. Local shop Celfin forecasts that the rate will increase to 3.25% by the end of 2010.
Codelco’s E-CL Stake Sale Expected in November
Bankers in Chile say that Codelco could be selling its 40% stake in energy subsidiary E-CL, formerly known as Edelnor, on the local exchange in late November. Analysts have estimated the stake to be valued at about $1.1bn. In September, the Chilean copper miner hired JPMorgan and Larrain Vial to explore strategic alternatives for the stake. Codelco co-owns E-CL with France’s GDF Suez, which holds a 52.4% stake, in addition to a 7.6% free float.
Chile Expected to Tighten Rate
Morgan Stanley says in a research report that after 4 consecutive months of 50bp rate hikes, the central bank is likely to slow the pace of tightening to 25bp, tightening to 2.75%, a possibility it considered before during the September 16 meeting. The main driver behind the lower increase is the rally in the real exchange rate, which represents a disinflationary factor while there is still very low inflation, Morgan Stanley adds. Local bank Celfin also believes the central bank will opt for 25bp over 50bp. It forecasts that the rate will reach 3.25% by year-end.
Construmart Buys Hardware Chain
Chilean construction materials company Construmart says it has acquired hardware chain Comercial El Bosque. It does not disclose how much it is paying for the chain, but says the target has annual revenue of about $20m. The buyer’s legal counsel is Urenda, Rencoret, Orrego y Dorr and Comercial El Bosque’s financial advisors are Inversion Banmerchant. Construmart expects to invest $50m in the company by the end of 2012, including possible acquisitions, it says.
Chile Seeks Frequent Issuer Status
Chile aims to become a frequent bond issuer, following on from a successful $1.5bn 2-tranche 2020 deal in July, finance minister Felipe Larrain tells LatinFinance. He adds that this will partly be to fund the $8.4bn it will need to invest over the next 4 years to continue to repair damage from the earthquake. The total funds needed for reconstruction, from both private and public funds, are estimated at $30bn, he adds. Larrain adds that the bond issuance also set a benchmark for private Chilean companies to issue bonds. “We were able to reduce the cost of borrowing for the state, which will also benefit Chilean companies so that they can issue in pesos,” he adds. Larrain also says Chile could look to build out its curve in pesos, and may do a 5-year bond issue next, though he does not say when. He adds that for the moment the finance ministry is not looking at doing bond issues in other currencies. “We have diversified our assets in a range of currencies through our sovereign fund, and while there is a possibility we could diversify our liabilities we have minimum size constraints, so for the moment we will focus on Chilean pesos and dollars,” says Larrain. The finance minister is also confident that Chile will continue to be able to raise funds in international markets at very competitive levels, and will need very little support from the IMF. He adds that he expects Chile to have a long term sustainable growth rate of 6%. Projects the government is working on, aside from mining, which Larrain says are worth $50bn over the next 10 years, include ports construction, which the government is auctioning concessions for, and renewable and traditional energy generation projects, as it needs to increase capacity by 80%.
Copec Pursues Proenergia
Chilean energy company Copec says it has launched an offer to acquire 4.9% of Colombia’s Proenergia Internacional for about $237m in cash. Copec already owns 47.2% of the target. On May 14, Copec acquired 100% of AEI, which gave it its stake in Proenergia. At that time, Copec revealed its intention to buy the additional stake. Proenergia has 53% of SIE, which owns 89% of Terpel’s business in Colombia. Copec will buy the shares in the Colombian exchange. Corredores Asociados will handle the transaction.
Santander Chile Goes Higher Grade
Fitch has upgraded Santander Chile to AA minus from A+. The outlook is stable. The ratings reflect the potential support from the Spain-based parent, the local bank’s leading market share and its strong profitability, healthy asset quality and good capital adequacy. Fitch says loan loss provisions fell to 1.67% of total loans at August 30 from 2.35% as of December 31 2009. Santander Chile has a market share of 20.3% in total loans at June 30.