Category: Mexico

Mexican cement maker Cemex will this week look to wrap up negotiations with banks to extend its 2009 and 2010 loan maturities by 12-24 months, say people involved in the process. The talks surround close to $10bn in bank debt and covenants, margins and terms and conditions are all being renegotiated. The talks, which have been going on for a good part of a month between the company and five lead banks – BBVA, Citi, HSBC, RBS and Santander – are aimed giving Cemex breathing room to restructure its operations and balance sheet. Tenors on up to 4 syndicated or club facilities are being extended, while terms on 2 more bilateral loans are also being renegotiated. In 2009 alone, Cemex faces $6bn in maturing bank debt, which accounts for 43% of its total outstanding debt, a person close to the talks told LatinFinance in mid-November. Cemex has recently been downgraded by Fitch to BB+.

Office Depot Mexico (ODM), a joint venture between Grupo Gigante and Office Depot, will invest about $50m over a 5-year period to enter and expand in Colombia, Sergio Montero, a spokesman for Gigante, tells LatinFinance. Montero says that expansions will be financed using cash on hand and that while it is preferable for ODM to grow organically in Colombia, potential acquisitions might be considered. He also says that no financial advisor is on board at the moment. The company plans to open its first store in Colombia in late 2009, Montero adds. ODM also plans to next year open 10-20 stores in Mexico and possibly CentAm, versus almost 30 stores opened in the region so far this year.

Mexico’s Grupo Gigante says in a letter to the BMV that it has agreed to keep its stake in Office Depot Mexico unchanged at 50%. The retail conglomerate had been trying to purchase the 50% that Florida-based Office Depot owns. Gigante had offered to acquire the remainder of the company, but the $430m offer was rejected in October. Gigante also says Office Depot Mexico will expand to Colombia using its own resources and not those of the stakeholders.

S&P has rated AAA on a local scale the MXP10bn 5-year local bond shelf from Telmex Internacional, which it says will be used primarily to refinance debt. The agency also affirms the issuer’s BBB+ global rating with a stable outlook, noting ample cashflow and a manageable maturity schedule. S&P says Telmex uses forwards and swaps to minimize currency and interest rate risk, but says the company has not reported any related negative impact. Inbursa is managing the program. After being spun off in a $16bn transaction in June, Telmex Internacional was expected to translate its large cash position into acquisition activity and aggressive organic growth in markets such as Argentina, Chile and Brazil. The local program was filed in early November.

Homex has named Carlos Moctezuma as CFO, replacing Alan Castellanos who stepped to pursue other opportunities. Moctezuma has been with the Mexican homebuilder for 5 years, most recently as director of strategic planning. Homex also named Hector Cuen as Treasurer. Cuen is experienced in debt and capital markets and other areas of investment and treasury operations, Homex says. Elsewhere, Brazilian education management company Estacio has named Eduardo Alcalay CEO, following the resignation of Joao Carlos de Castro Rosas for personal reasons. Following a BRL447m IPO in 2007, Estacio sold a 20% stake to GP Investments for BRL259m in May.

Carlos Vara, co-head of Citi’s LatAm investment banking unit, has left the firm, say people familiar with the matter. Friday was apparently the last day for the Mexico-based executive. The reason for his departure is not clear, though some speculate the choice to leave was voluntary. The investment banking business that Vara helped run covers advisory, M&A and the equity product on occasion. Ricardo Lacerda, Vara’s former co-head based in Sao Paulo, remains at the firm, say company officials, though it is not clear who will replace Vara to run Mexico. A Citi spokeswoman declines to comment.

Put options to sell oil at $70/barrel over the next few years and more than MXP100bn in the budget for infrastructure projects should allow Mexico to maintain a constant fiscal policy in 2009, says finance undersecretary Alejandro Werner. “We will be able to implement the 2009 budget without any problem,” the official tells investors gathered at an EMTA event in New York, despite a forecast of 1.8% for 2009 economic growth that could trend toward the downside. Werner says the hedge and about MXP96bn in 3 oil stabilization funds will allow the government to adopt strong countercyclical fiscal policy for more than the next 12 months. He also expects the government’s infrastructure agenda – including MXP35bn in toll road concessions, MXP30bn in suburban train projects and the MXP50bn+ Punta Colonet port project – to stimulate growth. Funds from the MXP270bn Fonadin infrastructure fund and development bank Banobras can fill the void left by private sector lenders, Werner says.

Mexico’s Ferrocarril Mexicano has paid off MXP1.2bn in 5-year floating-rate local notes due Thursday, it says. Ferromex, the railroad unit of copper miner Grupo Mexico, said the paid using its own cash, and is left with $8m in bank debt due next year, MXP1bn in peso notes due 2014, and MXP1.5bn in peso notes due 2022.

Fitch has downgraded the outlook on the BB rating of Mexican hotel operator Grupo Posadas to negative from stable. The agency says exchange rate volatility has tightened the company’s liquidity as it requires it to post cash on margin calls related to positions held with derivatives. As of September, negative market value on derivative instruments totaled $11.1m, and a month after that, exposure had grown to approximately $50m. Cash required for margin calls at October 31 was approximately $33m. Fitch also says that it expects year-end results in the hotels segment to remain stable, as a depreciated MXP leads to improved performance in coastal hotels and Mexican destinations become more attractive from a cost perspective. In 2009, decreased global economic activity might affect performance and results, Fitch notes. Elsewhere, Fitch put Chile’s Empresas Iansa on watch negative and downgraded its foreign and local currency and $100m unsecured notes due 2012 ratings to BB minus from BB+. The agency says deteriorating financials in 2008 and weak profitability and cash flow as well as a substantial increase in debt levels as reason for the cut. For the first nine months of 2008, says Fitch, Iansa’s debt/Ebitda ratio was 15.1x compared to an average of 4.2x and 2.9x, respectively, between 2005 and 2007. As of September 30, short-term debt represented 59% of Iansa’s total debt, while cash and equivalents cover only 11% of short-term debt. The agency says that if sugar and juice concentrate businesses continue to trend down over the next few months, the company could have difficulty decreasing its leverage below 8.0x by the end of 2008. Meanwhile, Fitch cut ElectroAndina’s outlook to stable from positive and affirmed its local and foreign currency ratings at BB. The outlook revision, says Fitch, reflects the company’s increasing working capital needs, high contracted position under a context of natural gas restrictions for power generators, and uncertainty related to the ou

Moody’s has placed the Ba3 ratings of Mexico’s CIE on review for possible downgrade. The review, says Moody’s, is a result of CIE’s weakening liquidity position due to a drop in revenues and sizable near-term debt maturities. Affected is the company’s corporate family rating as well as that of the company’s $14m senior unsecured notes due 2015, MXN500m in certificados bursatiles due December 2009, MXP650m in certificados bursatiles due April 2010 and MXN1.4bn in certificados bursatiles due October 2010.