AGC Controladora, a private equity manager affiliated with US-based Northgate Capital, has filed for a certificado de capital de desarollo (CCD) transaction in Mexico’s domestic market. The transaction is being called the first fund of funds in the CCD market, though it will be able to make direct investments in Mexican companies in addition to other PE funds. The private equity firm plans to raise up to MXP13bn through a 10-year fund, but is initially seeking MXP2.6bn, plus future capital calls. Regulators decision last year to allow capital calls in CCDS ended a debate that had slowed issuance for the 2-year-old asset class. Bankers are now optimistic that CCD market will resume activity at a healthier pace. The ACG fund plans to invest in a variety of sectors, but return structure varies somewhat from most PE fund-based CCDs. Investors receive their initial investment plus a preferred return equivalent to the Mexican Bolsa’s plus 500bp, before the managers take a 5% cut, with any remaining funds being divided between investors (95%) and managers (5%).Vector is managing the sale. AGC targets a closing of March 14, according to the documents, though CCD closings typically lag initial filings by several months.
Category: Regions
Urbi Targets Low 10s
Urbi Desarrollos Urbanos (Urbi) is aiming for a 10.25% area yield on a new $300m 10-year NC5 bond, expected to price today. The Ba3/BB minus Mexican homebuilder was scheduled to finish a roadshow Thursday. Talk is wide to peer Homex, which has a 2020 trading at around 9.60%. The issuer’s outstanding 2020s have recently been trading as tight as 9.5%. BBVA, Credit Suisse, Citi and Santander are managing the sale.
Pemex Settles Differences with Repsol
Pemex has agreed to work with the management of Spain’s Repsol and to keep its ownership stake in the company. The more cooperative stance marks major turnaround for the Mexican state-owned oil company, which up until now had sought to build alliances with other shareholders to revamp management at the Spanish firm. The companies are putting together a 10-year cooperation agreement that will involve working jointly in business opportunities that arise in the upstream, downstream and LNG sectors in the Americas, as well as the downstream business in Spain and Portugal, Pemex says. In Mexico, executives from both companies will evaluate and promote joint business opportunities as well. In turn, the Mexican state oil company has agreed to maintain a stake in Repsol of anywhere between 5% and 10%, and to “support the strategic plan and structure of the current Repsol management,” Pemex notes in a statement. It currently holds a 9.5% stake in Repsol. Pemex increased its stake to 9.5% last year and struck a failed agreement with Spanish builder Sacyr-Vallehermoso, another Repsol shareholder, to force a change in Repsol’s top brass. Pemex even considered spending an additional EUR854.3m to up its Repsol stake to 12.5%, and gain a greater say in the company. The deal fell apart, however, when the cash-strapped Sacyr was forced to sell half of its 20% stake back to Repsol in late 2011. “For the moment Pemex is not considering reducing its Repsol stake. We’ve put a 5% floor as a way to give us some room to maneuver but nothing more,” a spokeswoman says. Although the Mexican oil company enjoys generous after tax cash flows, the Mexican government’s tax take is considerable and the company struggles with lower oil reserve replacement and higher leverage than its international competitors.
Cabcorp Starts Investor Meetings
The Central American Bottling Corporation (Cabcorp) launched investor meetings Thursday in London and Santiago, and will head to Boston, Los Angeles and the US West Coast before finishing in New York on Wednesday. The Guatemala-based anchor bottler for Pepsi in Central America has been heard looking to raise $150m in the international bond markets. Citi is sole manager on the possible deal, rated Ba2/BB/BB+. Cabcorp is controlled by the Castillo family, with Pepsico holding an 18% stake. Cabcorp expanded into the Caribbean in 2009 when it bought PepsiAmericas and its territories in Puerto Rico, Jamaica and Trinidad. As of September 30, 2011, short-term maturities only amounted to $19m, versus $85m of cash on hand, according to Moody’s.
Volcan Firms Guidance on Debut Bond
Peru’s Volcan Compania Minera emerged Wednesday with guidance of 5.625% area on its expected $600m 10-year bond, tightening from 5.75% area whispers heard earlier this week. The borrower was scheduled to finish roadshows in Boston and New York yesterday and price as soon as today. The company’s board has approved an up to $600m issue maturing in 2021, according to Moody’s, which assigned a Baa3 rating to the deal. Proceeds are expected to be used to finance energy projects. JPMorgan and Morgan Stanley are leads. In 2008, Volcan secured a $200m 3-year syndicated loan with a margin of Libor plus140bp via leads BBVA. Other banks participating in the syndication included JP Morgan, Credit Suisse, Barclays, Deutsche Bank, Societe Generale and UBS. The borrower is involved in the extraction, concentration, treatment and commercialization of polymetallic ores such as zinc, lead, and silver.
Credito Real Preps MXP Bond
Mexico’s Credito Real plans to raise up to MXP1bn ($76m) in the domestic bond market. The proposed 3-year notes, rated A minus on a national scale, will pay a spread over TIIE. The notes are part of a MXP2.5bn program and have a preliminary pricing schedule of the third week of February. Proceeds will be used to refinance debt. BBVA Bancomer is leading the transaction. Credito Real last issued MXP400m in 3-year floating rate notes in November at TIIE +325bp, which were partially guaranteed by Nacional Financiera and Banco Interamericano de Desarrollo.
Vitro Navigates Challenges to Restructuring
The US Court of Appeals for the Fifth Circuit has denied the seventh attempt by bondholders to undo Vitro’s Chapter 15 bankruptcy filing, another indication that the Mexican glassmaker is set to successfully restructure its debt. Vitro insists that the bankruptcy and restructuring process is being conducted in Mexico and that any legal challenges in the US will be futile. “We should note that 95% of the company’s assets are in Mexico. These bond holders have a strategy to make the process harder,” a company spokesman says. Investors have made several attempts to seize the company’s US assets, but have failed to get at them so far. In its approach to restructuring its obligations, the glassmaker has used roughly $1.9bn in intercompany debt to give itself enough voting power to approve what has been largely an unpopular restructuring plan for other creditors. As it stands, the company’s restructuring proposal includes $814.7m in new 2019 bonds, a fee of up to $32.7m and mandatory convertible debt of $95.8m. JPMorgan has estimated that creditors who accept the deal may recover between 48 and 60 cents on the dollar, depending on the level of debtholder support. Last June, Vitro sold a number of assets held by its US subsidiary Vitro America to American Glass Enterprises for $55m, further reducing what bondholders could seize, and it has also sought to sell other remaining assets to US private equity firm Grey Mountain Partners. So far, the Mexican company has managed to push through its plan, but analysts and investors point out that, if successful, the debt restructuring could make it harder or more expensive for other Mexican companies to access to international credit markets.
Banco Popular Sells Bonds
Colombia’s Banco Popular sold COP400bn ($221m) in bonds in the domestic market Wednesday. A COP83bn 1.5-year tranche pays IBR plus 1.80%, a COP94bn 2-year series pays DTF plus1.82%, and a COP222bn 5-year portion pays IPC plus 3.90%. A 3-year IPC-linked tranche was discarded. The sale saw more than 2x demand. Popular managed the sale, rated AAA on a national scale.
BP Buys 40% Stake in Petrobras Offshore Oil Block
BP has struck a farm-in deal with Brazil’s Petrobras that gives the UK oil major a minority stake in a deepwater block located in northern Brazil’s Ceara basin. As agreed, BP will take a 40% stake in the BM-CE-1 offshore block with 60% remaining in the hands of Petrobras, a BP spokesman says. Brazil’s energy regulator Agencia Nacional do Petroleo has approved the deal, the BP official adds. The BP spokesman declined to discuss additional details and Petrobras officials would not comment on the deal. Petrobras originally secured the license for the 1,281-square km-wide block in 2001 as part of Brazil’s third licensing round of oil exploration blocks. Entry into the Ceara basin is the latest BP offshore deal in the South American country since it bought the assets of Devon Energy in Brazil which included 10 exploration blocks, 7 of them in the Campos basin.
Citi Heard Clinching Cabcorp Bond Mandate
The Central American Bottling Corporation (Cabcorp) is heard mandating Citi as it looks to raise an expected $150m in the international bond markets. This comes as Moody’s assigns a Ba2 rating for the proposed senior unsecured fixed-rate global note after reviewing a preliminary draft of the legal documentation for the offering. The Guatemala-based anchor bottler for PepsiCo in Central America is controlled by the Castillo family, with Pepsico holding an 18% stake. Pepsico’s involvement is seen as credit positive, but the ratings are constrained by its comparatively modest profits against global peers and the company’s strategy to pursue acquisitions on a regular basis, the agency says. Cabcorp expanded into the Caribbean in 2009 when it bought PepsiAmericas and its territories in Puerto Rico, Jamaica and Trinidad. As of September 30, 2011, short-term maturities only amounted to $19m, versus $85m of cash on hand, according to Moody’s.