Hong-Kong based CST Mining has hired Morgan Stanley to advise on the sale of its stake in Peru’s Mina Justa project, just weeks after a sale to global trader Glencore fell through. Morgan Stanley will advise in the disposal of the stake in the mine which CST indirectly owns through its 70% stake in Peruvian miner Marcobre. The remaining 30% in Marcobre is owned by LS-Nikko Copper and Korea Resources. Officials at CST could not immediately be reached for additional details. In June, CST struck a deal to sell Mina Justa to Glencore for $475m, but it fell through reportedly after the parties failed to agree on an offtake agreement for the mine’s future production. At the time, analysts saw the deal as fairly priced. Liberum Capital estimated the $475m transaction had an implied enterprise value to reserves, taking out capex, of $0.54 per pound. This was lower than Vale’s $1.13bn offer for African miner Metorex in April, which Liberum estimated at $0.94 per pound. CST originally acquired the mining assets in February 2010 when it paid $250m for Chariot Resources which owned a 70% stake in Marcobre.
Category: China
Sinochem Ups China’s Oil Buys In Brazil
China’s Sinochem will acquire a 10% stake in five Brazilian oil concessions from UK-based exploration and production company Perenco, as part of an exploration farm-out agreement. In exchange for the stake in five offshore blocks of Brazil’s Espirito Santo basin, the Chinese company has agreed to fund several exploration wells, Perenco says. Perenco will retain a 40% stake and maintain its role as sole operator of the projects, while OGX Petroleo e Gas will keep a 50% stake. The financial terms of the deal were not revealed. The companies could not immediately be reached for additional details of the transaction. The Brazilian government awarded the concessions for the deep water wells during the 9th licensing round held in December 2007. Perenco’s agreement with Sinochem comes almost five months after it was forced to cancel a planned IPO for its Brazilian unit, led by BTG, Itau and Morgan Stanley, citing market upheaval. The share offering was meant to raise funds to finance the development of the five blocks.
Chinese Firm Outbids Brazilians for EDP Stake
China’s Three Gorges managed to outmaneuver its Brazilian rivals and won a coveted 21.35% stake in Energias de Portugal (EDP). The Chinese company paid EUR2.7bn ($3.5bn) for a package of 780m shares or EUR3.45 per share sold. The price offered came at a 53.6% premium over the share price registered on December 21, says Parpublica, the Portuguese state-owned holding company responsible for the sale. Officials at Parpublica and Three Gorges could not immediately be reached for additional details. China’s successful bid beat three other rivals for the assets, namely Brazil’s Cemig and Eletrobras, as well as Germany’s E.ON, but no details were immediately available on the other offers. The Portuguese utility company is a major player in Latin America with a whole portfolio of power generation and distribution assets in Brazil, one of the most interesting aspects of the acquisition for the Brazilian utilities involved in the process.
Recope Preps CDB Loan
Costa Rica’s Recope and the China Development Bank (CDB) are working on a 15-year $800m-$900m syndicated loan with a 3-year grace period arranged by CDB to fund improvements at Soresco, a joint refinery venture between China National Petroleum Corporation (CNPC) and Recope, the Costa Rican government says. The Costa Rican national oil refinery has signed a mandate letter with the bank and preliminary financial conditions are being explored, says a person familiar with the agreement, who declined to comment on the interest rate. Soresco, created in 2008, will invest a total of $1.24bn to revamp and expand the Moin-based refinery which will process 60,000 barrels of oil per day. The remaining $300m to $400m will be covered by both partners in equal amounts. Recope plans to issue bonds in the local market in 2012 to finance its share of the deal. As structured, the Soresco joint venture will take care of construction and then lease the facility back to Recope for 15 years with an option to purchase. The lease fee to be paid to Recope will be calculated assuming a 16% IRR for the project.
AMX RMB Bond Sees A2 Rating
Moody’s has assigned an A2 rating to America Movil’s (AMX) proposed RMB1.9bn ($300m) of senior notes. Proceeds are expected to be used for yuan capital expenditure funding. The outlook is stable. The proposed notes will not be guaranteed by Radio Movil Dipsa, AMX’s largest subsidiary which has provided guarantees to AMX’s previously-issued unsecured notes. Since October 2011, AMX has been issuing senior notes without this guarantee, the agency says. AMX has mandated HSBC to arrange 2-day fixed-income investor meetings in Asia starting today.
PDVSA Turns to Chinese Credit to Guarantee Brazil JV
Venezuela’s PDVSA has announced that a $1.5bn credit line will serve as a guarantee for its 30% participation in a joint refinery with Petrobras. This came just a day after the Brazilian oil company agreed to give PDVSA more time to finalize the transaction. Cash and a credit line by the China Development Bank will insure the project’s advance, says PDVSA. A spokesman for the company declined to offer more details. On Thursday, Petrobras announced it had given PDVSA 60 more days to settle its affairs on needed loan guarantees with Brazil’s BNDES to finalize its participation in the $13.36bn project for the Abreu e Lima refinery. The PDVSA statement quotes the company’s president, Rafael Ramirez, saying that it has made the needed money available and “all that is left is for BNDES to do the logistical work” necessary to move forward. Under the terms of the Pernambuco-based refinery, first signed in March 2008, PDVSA would take a 40% stake in the plant and become a main heavy crude supplier for the refinery. The total investment in the plant was originally expected to reach $4bn but now it is estimated at $13.36bn.
AMX to Test Dim Sum Market
America Movil (AMX) has mandated HSBC to arrange 2-day fixed-income investor meetings in Asia starting next week amid expectations that the veteran LatAm borrower may try its luck in the so-called dim sum market as it seeks out new pools of liquidity. “There is a lot of money in Asia and issuers are continuing to look at ways to access those markets,” says one DCM banker. “AMX is consistent with diversifying its financing needs and is a more sophisticated borrower with an uncanny ability to read the tea leaves.” This comes just a month after AMX broke new ground by debuting in the Japanese market and becoming LatAm’s first corporate issuer to sell a Samurai without a JBIC guarantee. Now the Mexican telecom may well be the first to test Asian investors’ appetite for RMB-denominated paper from LatAm credits, though Brazilian names such as Bradesco and Vale have also been heard considering such an option. Given the deep pools of liquidity in Asia, it makes sense that borrowers with large capital needs such as AMX are considering engaging investors there as they look to diversify their funding bases and ease pressures on core dollar markets. “AMX has significant capital requirements so there is only so many times it can tap the USD and EUR market,” says another DCM banker. According to a banker familiar with the RMB-denominated market, dim sum issuances have varied in size between $30m-$200m with tenors ranging between 2 to 4 years. In 2010, McDonalds became the first non-Chinese entity to issue a dim sum bond, selling a relatively small RMB200 million ($29.5m) 3% 3-year. Last year companies placed 30 dim sum deals totaling RMB40bn. Volumes are expected to exceed those levels in 2011 with some bankers believing that the dim sum sector will become a core funding source for many borrowers in 20-30 years time. “It’s a nice way for AMX to make foothold now,” a banker says. The A2/A minus/A rated company will hold meetings in Singapore on Monday, December 5 before wrapping u
Carrier Signs JV with China’s Midea
Brazil’s a global air conditioning and refrigeration company Carrier, has decided to create a joint venture company with China’s Midea Group that will distribute products in the largest markets in South America. The deal will give Midea a 51% stake in the new company with Carrier retaining the rest. The venture will make use of Carrier’s air-conditioning and ventilation production assets in Brazil, Argentina and Chile. The company declined to say how much these assets are worth. Midea is one of the leading air conditioning and white appliance manufacturers in China.
Sinopec Clinches Good Price for Galp Brazil Stake
The China National Petrochemical Corp’s is seen obtaining an attractive price after purchasing a 30% stake in the Brazilian operations of Portugal’s Gap for $3.54bn, marking yet another step into Latin America by the company better-known as Sinopec. “Sinopec got a good deal, and it seems less willing to overpay for barrels as it did in the past,” said Thomas Adolff, European oil industry analyst at Credit Suisse. He notes that Galp was also selling its assets under duress, which no doubt helped strengthen Sinopec’s position. Based on Credit Suisse estimates, the enterprise value of the deal is $4.30 per barrel, which is much lower than Sinopec’s acquisition of a 40% stake in Repsol’s Brazilian assets in October 2010 for $5.30 a barrel. The shop also reckons the transaction was valued below Petrobras’ transfer of oil rights which, adjusted for WACC and a special participation tax, stood at $5.80 a barrel. As priced, the deal values the overall Brazilian unit at $12.5bn. The Portuguese company has been seeking to raise as much as EUR2bn ($2.75bn) from the sale of assets and has considered unloading as much as 40% of its business in Brazil. Bank of America Merrill Lynch, UBS, JP Morgan and Caixa advised the Portuguese company. Galp holds stakes in 21 oil projects in seven different Brazilian basins, including the Santos pre-salt basin home to the Lula field, the second largest oil discovery in the Americas.
CNOOC, Bridas Abandon $7bn PAE Purchase
A joint venture between China’s CNOOC and Bridas Energy Holdings (BEH) has decided against purchasing a 60% equity interest in Argentina’s Pan American Energy (PAE) from BP. Earlier this month, talks had been extended with BP to acquire the British oil company’s stake in PAE for $7.06bn in cash, and a final closing date had been expected sometime next year. This comes shortly after the Argentine government’s mandate in October calling for oil and mining companies to repatriate export earnings. In a statement, Yang Hua, CNOOC’s CEO, expressed a willingness to strengthen its partnership with BEH and expand in Argentina, but noted that “…certain conditions precedent to the completion of the deal were not obtained as expected, and Bridas chose to terminate the transaction”. The sale of BP’s 60% stake in the Argentine oil company was agreed in late 2010, after which Bridas paid BP $3.53bn as an initial deposit. The agreement states that should the sale fall through, BP would return the deposit and pay an additional $700m for “amendments to the Pan American Energy limited liability company agreement,” according to a statement in BP’s recently released 3Q 2011 earnings report. The sale of its stake in Pan American Energy was agreed as part of BP’s strategy of selling a number of worldwide assets following the Gulf of Mexico oil spill. Standard Chartered was advising BP.