Minera Frisco has agreed to pay $750m to acquire mining assets in Mexico from AuRico Gold, it says. The deal includes the operating Ocampo gold and silver mine, the Venus and Los Jarros projects and a 50% stake in the Orion project. The transaction is somewhat difficult to value, analysts say, due to the involvement of pre-operational assets and the infrequency of similar transactions in Mexico. Though the price tag represents less than 10% of Frisco’s market cap, the new assets’ contributions to revenues could be much larger, Julio Zetina, an equities analyst at Vector Casa de Bolsa, tells LatinFinance. “Slim knows how to buy. They are good asset hunters,” he adds. Frisco mentions financing for the sale coming from Bank of America Merrill Lynch, its advisor on the deal, and the company does not respond to a request for additional comment. With less than $200m in cash on hand, Zetina says, Frisco will unlikely use much of its own resources. A debt financing might make more sense for the company, he adds, despite equity markets being very welcoming for Mexican issuers in recent weeks. Canada-based AuRico plans to use proceeds to pay down debt, make other investments and pay dividends. The transaction is expected to close in December. Credit Suisse BMO, CIBC and Fasken Martineau DuMoulin advised AuRico. Frisco was spun off from Carlos Slim’s Grupo Carso holding company last year, with Slim owning nearly 80%.
Category: Regions
Duratex Launches Tablemac Tender
Brazil’s Duratex has launched an offer to buy up to 12% of the publicly traded shares of Colombia’s Tablemac, it says. As part of its plan to eventually obtain as much as 52% of the industrial wood panels specialist, it will look to spend as much as COP48.72bn ($27m) to buy up to 4.06bn shares at COP12.00 each, it says. The offer will take place October 17-30, with allocations November 1. In May Duratex agreed to buy 25% of the Tablemac for $56m, at the same price. Under the agreement in May, Duratex can, within the next 2 years, opt to buy another 15% at the same per-share price adjusted by an annual rate of 6.25%.
Mexichem Clinches Well-bid Equity Sale
Mexichem has priced a MXP15.6bn ($1.21bn) follow-on equity offering, coming at a 2.9% discount and drawing 4x demand. The industrial conglomerate priced 260m shares, assuming a 15% greenshoe is used, at MXP60.00 each, according to sources familiar with the sale. The level compares to Tuesday’s MXP61.82 closing price. About 60% of the tranche was expected to be allocated to international investors, and 40% to Mexican-based buyers. The strong international bid suggests investors are still keen to get their hands on Mexican assets, even as they become more sensitive to high valuations in the country. Including the greenshoe, the all-primary deal represents 12.4% of the company’s shares. Mexichem is raising funds for general corporate purposes, including expansion projects and working capital. Citi, HSBC, JPMorgan and Morgan Stanley managed the international portion of the transaction, joined by BBVA on the Mexican portion. The sale follows a $1.15bn international bond sale last month drawing 17x demand, as Mexichem continues to raise funds following the $500m acquisition of Dutch pipe maker Wavin. The deal is Mexico’s largest follow-on since Cemex’s $1.87bn sale in 2009, according to Dealogic data. Credito Real is set to finish what should be the most active four weeks of Mexican equity issuance in recent memory, with an IPO expected to raise $200m-equivalent scheduled for October 16.
Norwegian Sets up Shop in Rio
Norwegian bank DNB has opened an office in Rio de Janeiro, it says, to be led by Arne Christian Haukeland. The bank has had a presence there since 1968, but decided to establish an office to better meet customer needs, which include offshore and energy advising. DNB has already participated in several deals in the region, notably as joint lead on a $500m 3-year bond for OSX sold in the Norwegian market in March. It also was a lender to a 3-year $180m credit facility for Transelec in August.
Corpbanca Considers Subordinated Bond
Chile’s Corpbanca is planning a subordinated bond sale in the international markets, it says, as part of the funding for its $1.28bn acquisition of Helm Bank. The Corp Group Interhold entity raised $130m in the cross-border markets in 2010, through a 2015 bond led by Corpbanca and Larrain Vial. Corpbanca’s New York branch has raised $62m in 2014 bonds through two transactions this year, led by BNP Paraibas. Corpbanca is rated Baa1/BBB+.
Corpbanca Moves up Colombian Banking Ladder
Chile’s Corpgroup is set to increase its scale in Colombia following an agreement to purchase Helm Bank for an expected $1.28bn. Helm had long been rumored to be for sale while international players paid high premiums to scoop up other Colombian banks in the past year. The deal, seen as coming cheaper than other recent Colombian FIG deals, follows on from the group’s $1.23bn purchase of Santander Colombia and makes Corpbanca Colombia’s fifth-largest bank. “The price paid in our opinion is reasonable for a transaction of this nature,” Bolsa y Renta says in a report, noting it is 5.4% below what the brokerage had previously estimated a sale of the Helm to bring. The valuation represents 15.1x 2012 price/earnings and 1.78x book value, the shop says. Corpbanca sees 14.2x 2012 p/e and 1.63x book, it says. The levels Corpbanca estimates indicate a premium of 11.6% to the average levels seen in the most recent Colombian FIG deals but also a 40.0% discount to the book values, Interbolsa says in a report. In the deal, Corpgroup buys 91% of Helm’s shares from its controllers, it says, for $0.28 per share, and will follow up with a public offer for the remainder. This price represents a slight premium to Monday’s COP487 ($0.27) close. Shares closed Tuesday at COP482, and have risen 58% this year. Corpgroup also agreed to pay $17m for 80% of Helm’s insurance unit. Corpbanca Chile plans to raise $600m in equity capital, including the approximately $225m that the IFC agreed to pay for 5% of the bank last week. Corpbanca Colombia plans a separate raise of up to $1bn, of which Helm’s controllers will buy $440m and Corpbanca controllers $285m. Inverlink advised Helm. Simpson, Thacher & Bartlett and Pose Herrera were legal advisors to Corpgroup, which does not return a request for comment on financial advisors. At the end of the process, Corpgroup expects to hold 64% of Corpbanca Colombia, and the Helm controllers 20%. Cross-border subordinated bonds could also help fund the acquisi
Mexichem Set for FO
Mexichem is scheduled to price today an equity offering of more than $1bn, becoming the latest Mexican issuer to take advantage of investor appetite for the country. The industrial conglomerate is offering 260m shares, assuming a 15% greenshoe is used, in an all-primary share sale that would raise MXP15.74bn ($1.23bn) at Monday’s MXP60.53 closing price. Mexichem is raising funds for general corporate purposes, including expansion projects and working capital. Citi, HSBC, JPMorgan and Morgan Stanley are managing the international portion of the transaction, joined by BBVA on the Mexican portion. The sale follows a $1.15bn well-demanded international bond sale last month, as Mexichem continues to raise funds following the $500m acquisition of Dutch pipemaker Wavin.
Sicrea Nears ABS Retap
Sistema de Credito Automotriz (Sicrea) plans a MXP300m ($23m) reopening of its 2017 bonds backed by trade receivables Thursday. In the original deal, Sicrea priced MXP1bn of the 2017 bonds at TIIE+160bp. ING is managing the transaction, rated AAA on a domestic scale. Sicrea is an association of Nissan dealers which provides auto loans.
UnitedHealth Pays up for Brazil Entry
UnitedHealth Group has agreed to pay $4.9bn to buy 90% of Brazil’s Amil Participacoes, the companies say, in a transaction seen as coming at a significant premium. The agreement gives the largest US healthcare operator an entrance into an underpenetrated Brazilian market and control of the country’s largest healthcare organization. The deal for 359m shares comes at BRL30.75 ($15.15) per share, representing a 21.5% premium to Friday’s BRL25.30 close. “This is a high price. We think UnitedHealth must see a large upside,” says a Sao Paulo equity analyst. He sees the transaction coming at 32.4x 2012 price/earnings and 26.4x 2013 p/e, compared to the respective 26.5x and 20.7x levels at Friday’s closing price. The US operator is paying up for an association with founder and CEO Edson Bueno – who keeps a stake and joins United’s board – and his track record in Brazil, as well as for access to a more vertically integrated model than it has in the US, the analyst notes. Both could be useful for future EM expansion as well as making improvements in United’s home market. Raymond James sees the deal at 38.2x 2013 p/e, it says in a report, yielding a 76% premium to Amil’s historical averages. “The valuation is rich for this kind of business, but the growth potential is much better than the US-based options,” Matthew Cofina, an analyst at Morningstar, tells LatinFinance. He notes it could boost United’s margins going forward, and that Brazil is an attractive base for possible additional acquisitions. UnitedHealth will buy Amil in a two-step process, with Brazilian tax benefits reducing the effective cost of the acquisition by $600m to $4.3bn. Following Brazilian regulatory approval expected in 4Q, UnitedHealth will buy 60% percent of Amil’s outstanding shares from controllers. In 1H 2013, it will make a public offer for the remaining 30% percent. Bueno has also agreed to invest about $470m in UnitedHealth stock and hold the shares for five years, with Bueno and partner Dulce Pug
Yum Subsidiary Set for MXP Bond
Mexico’s Premium Restaurant Brands is scheduled to price today MXP500m ($38m) in domestic 2015 bonds, according to a person familiar with the sale. Price talk for the floating-rate bond, which comes with a 60% partial guarantee from Scotia, is TIIE+250bp-300bp. Scotia is managing the transaction, rated A+ on a national scale. The fast food retailer is a unit of Yum International with 500 restaurant locations within 31 Mexican states.