MPX Energia, the Brazilian coal and electricity company controlled by Eike Batista, has sold a 10% position in the company to German utility E.ON for BRL850m ($471.6m). The companies also signed a joint venture agreement to develop renewable energy ventures in Brazil and Chile, MPX says. The deal contemplates a BRL1bn capital increase, of which E.ON will provide BRL850m and shareholders will see an equity offering at BRL55.00 a share. The deal between the new partners has several moving parts. In an initial step, MPX debenture holders will convert their debentures into MPX shares. MPX’s coal assets in Colombia will then be bundled into a new company, CCX, with a BRL814m cash infusion and be spun off. For its part, MPX will bring projects with an 11,000MW capacity into the 50-50 joint venture, including Acu Power projects in Rio de Janeiro, Chile’s Castilla project, the TPP Parnaiba expansion and the Sul and Seiva power plants. E.ON will also retain a call option in the JV to buy an additional 38.9% of the Acu Power venture at book value. Officials at MPX and E.ON could not immediately be reached for additional comment. MPX has long sought to launch an IPO for its Colombian coal mining assets in CCX and many have expected the sale to generate as much as $5bn. Last June, the company issued BRL1.37bn in convertible debentures, of which BRL600m went to BNDES, BRL200m to Gavea, BRL200m to Batista and BRL369m to minority shareholders.
Category: Regions
Mexican Homebuilder Could Lead Huaso Expansion
Mexico’s Corporacion GEO has filed a $100m-equivalent bond shelf in Chile, in a signal that regulatory changes could be working to attract new and more varied foreign issuers into the country’s so-called Huaso market. “We are undertaking this process to open windows to access financing,” Roberto Torres, the homebuilder’s head of capital markets, tells LatinFinance. The credit line registration is for a 10-year UF-denominated bond, with Santander as bookrunner. In Mexico, GEO is unable to issue such lengthy maturities and this has led it to seek out other markets for longer tenors and more attractive funding costs. Though GEO is not yet planning a specific transaction, it sees opportunities available in the Chilean market, and if necessary, could use proceeds from a sale to refinance debt. An issue would be swapped back into MXP. “We are confident that this process [the swap] is simple and accessible,” Torres says. GEO has one BBB Chilean national scale rating, and expects a second. Its rating is BB minus on an international scale. Geo would like longer-term debt, as short-term debt represents 29.1% of its MXP12.7bn total debt. Only 3 Huaso bonds have been issued in Chile – 2 from Mexico’s America Movil and one from Peru’s BCP, but with a reduction in regulatory restrictions last year, it is hoped that more foreign borrowers will be able to feed the country’s growing institutional appetite.
Koreans Take Stake in Panama Copper Project
The Korea Panama Mining Corporation (KPMC) has agreed to acquire a 20% stake in the Cobre Panama project, currently run by Canada’s Inmet Mining. KPMC, a joint venture between LS-Nikko Copper and the Korean Resources Corporation, acted under an option agreement to acquire the stake for $155m, leaving Inmet in control of 80% of the venture, Inmet says. The acquisition price reflected KPMC’s historical development costs incurred up until the option agreement date and its share of development costs above $150m. Officials at Inmet could not immediately comment on the valuation details of the deal or the potential advisors involved. Following the deal, KPMC will continue to finance its share of the development costs. KPMC and Minera Panama, the owner of the Cobre Panama copper venture, in turn will put together an offtake agreement that will allow KPMC to purchase a 20% share of Minera Panama’s concentrates production.
Continental Sheds Spanish Doubts with Upsized Deal
Peru’s BBVA Continental sold $500m in new bonds Tuesday, upsizing from an expected $300m and defying pushback seen earlier this week. While Continental’s ties to its Spanish parent and the expectations of more bank supply had left some investors expressing doubts about the issue, the deal gained enough moment to generate a healthy $1.8bn book and the participation of some 20 plus accounts. The bond traded at plus 0.70 in the aftermarket, according to an investor. The BBB/BBB plus 144A/RegS bond priced at par to yield 5.75% or UST plus 490.7bp. This comes one day after BBVA Continental emerged with 5.875% area guidance following whispers of 6%. Mainly comped against BBVA’s illiquid 2020 bonds, new issue premium estimates varied widely from 35bp-75bp, with those bonds spotted around 6% pre-announcement. Some investors found the deal priced cheap to its curve, but not relative to similar banks in other countries. Proceeds will be used to fund bank operations. Pricing of the transaction, originally scheduled for Monday, was carried overnight because Spain’s BBVA Group first had to announce a $1.3bn write down of goodwill charges on its US operations on the back of lower-than-expected growth. The BBVA Group says the write-down will not impact cash flow generation or liquidity and will result in a EUR400m positive impact on core capital of the group because of tax treatment of goodwill. BBVA, Goldman Sachs and JPMorgan managed the 144a/RegS transaction. The bank last came to market in November 2010, when it priced a $300m 2020 at 99.220 with a 5.500% coupon to yield 5.603%. S&P recently upgraded Continental to BBB from BBB minus following a similar move for the sovereign last month.
Generator Joins Peruvian Equity Pipeline
Peruvian securities regulators have authorized state-owned power utility Empresa de Generacion Electrica del Sur (Egesur) to publicly list shares on the Lima Stock Exchange, according to an official at the company. He declines to offer details about any specific transaction, and says no advisors have yet been hired. Peru’s market is expected to see more new issuance activity in 2012 provided conditions are benign. Cementos Pacasmayo is preparing a New York follow on, and port operator Andino Investment Holding plans a $60m local IPO pricing January 17.
American Tower Continues LatAm Purchases
American Tower, a US telecommunications infrastructure operator, continued its LatAm buying spree after agreeing to acquire 558 telecommunications transmission towers from Telefonica Moviles Chile, with their respective maintenance facilities, for CLP49.2bn ($95.7m). Telefonica Moviles Chile will continue using those facilities for its operations under a leasing agreement signed with American Tower’s local subsidiary ATC Sitios de Chile. Neither American Tower nor Telefonica Moviles could be reached for comment. The Chilean deal comes less than a month after American Tower acquired 2,500 telecom towers in Mexico, in a $500m deal with Pegaso PCS, also a unit of Spain’s Telefonica. The company used its own internal M&A group for the Mexican acquisition and no advisors were hired at the time.
DB Names Mexico Country Chief
Jorge Arce has been named Deutsche Bank’s new chief country officer in Mexico, replacing Juan Guthmann who had held the position on an interim basis after the departure of Tito Vidaurri early last year. Vidaurri was poached by Bank of America Merrill Lynch to lead its Mexico business following the retirement of Orlando Loera. Arce has been with Deutsche bank for 16 years, most recently serving as head of northern Latin America for the bank’s private wealth management business. He will now report to Bernardo Parnes, CEO of Deutsche Bank Latin America.
Positive Sentiment Aids Colombian LM Trade
Positive market tone acted as nice springboard for Colombia Tuesday when the sovereign decided to pull the trigger on a retap of its 6.125% 2041s in an effort to raise funding for a cash tender of its outstanding bonds that begins today. In the end, the country was able to upsize its reopening after watching books grow to over $3.6bn in size. Emerging with attractive 200bp area whispers and tightening to 195bp on official guidance, the issuer was able to price at 117.738 to yield 4.964%. The deal is thought to given investors around 20bp-25bp concession to the 170-175bp secondary level seen the day before pricing. “The timing couldn’t be better. Market tone was great and the issuer got a good price for size,” notes a syndicate away from the deal. The bonds had opened at 121 on price basis Tuesday and later dipped to 118 in the aftermarket, according to an investor. This comes as the sovereign readies a cash tender for the purchase of eight series of dollar bonds with maturities ranging from 2013 to 2027 and an outstanding size of $5.87bn. Colombia is offering to pay 110.125 on its 10.75% 2013s, 119.25 on its 8.25% 2014s, 101.875 on its FRNs due 2015, 121.875 for its 8.7% 2016s, 122.875 on its 7.375% 2017s, 158.375 on its 11.75% 2020s, 139.75 on its 8.125% 2024s and 133.00 on its 8.375% 2027s. The offer officially expires on Thursday, but may expire as early as 4:00pm New York time on Wednesday. The sovereign is offering to purchase an aggregate principal amount of bonds that will not exceed $600m or result in an aggregate principal price of more than $750m. HSBC and JPMorgan acted as leads on the bond and dealer managers on the tender.
Pemex Ponders Higher Stake in Repsol
Pemex is considering increasing its stake in Spanish oil company Repsol, ahead of a EUR67m ($86m) dividend payment today. Pemex’s board voted Friday to support efforts by general director Juan Jose Suarez Coppel to strike a deal with Repsol for “long-term cooperation” and decide on the appropriate stake to hold in the Spanish company. In public statements to a local radio station Friday, Suarez Coppel said Pemex could choose to increase its stake to 12.5% from its 9.5% holding, or could also decrease it to 6% or lower and lose a representative on the board. Acquiring an additional 3% of the company would run Pemex approximately EUR854.3m, based on Repsol’s total capitalization as of January 6 of EUR28.5bn. A Pemex press officer could not say when the final decision be made but noted that it will hinge on ongoing talks with Repsol leadership. In recent months, Pemex struck a deal with Spanish builder and Repsol shareholder Sacyr-Vallehermoso to vote as a block and overhaul the board structure. The deal fell apart late last year however after Sacyr decided to sell 10% of Repsol, or half of its stake, back to the company.
Santander Brazil Surrenders 4.41% to Qatari Bondholder
Spain’s Banco Santander has transferred roughly 4.41% of its Santander Brasil subsidiary to a Qatari government vehicle holding its convertible bonds, exercising an option to covert the notes ahead of schedule as it looks to meet capital requirements. Santander transferred the shares to a third party that would then deliver them to the convertible bond holders, the bank says. The Brazilian unit had transferred to its parent ADRs representing approximately 5.18% of the unit. In October 2010, Santander sold $2.72bn in 6.75% of 2013 convertible bonds to Qatari Holdings, which were convertible into shares at Santander’s discretion at exchange price of BRL23.75 per share. Santander Brasil shares closed at BRL15.34 Monday. The decision to exercise its right to convert the bonds is one of several ways the bank is trying to meet 9% core capital ratio requirement established by the European Banking Association. Santander officials could not immediately be reached for additional comment. The Spanish bank has been shedding asset in Latin America, and cut costs, most recently by laying 15 people from its New York offices in December. Rivals ING and RBS have also recently reduced their LatAm teams in NYC.