Brazilian bus body maker Marcopolo has acquired a 75% stake in its Australian counterpart Volgren Australia for AUD52.5m ($52.9m), with additional future earn-out adjustments. The Grenda family that founded Volgren will hold a minority stake in the business, but Marcopolo will retain an option to purchase the remaining 25% stake in 3 years time, the companies announced in separate statements. In addition to the purchase price, the deal between the bus makers includes an earn-out clause with an Ebitda floor for each of the following three years, Carlos Zignani, Marcopolo’s investor relations director tells LatinFinance. If the end year Ebitda exceeds the agreed upon floor, a multiple of 6x the excess will be multiplied by the 25% remaining stake and added to the AUD52.5m purchase price. In addition to the earn-out, the deal includes an option for Marcopolo to purchase the remaining 25% stake in the company at a multiple of 6x Ebitda, with an exercise date of June 2016. At that time, the value of the stake will be determined based on the average Ebitda of the previous 3 years. Based on Marcopolo’s estimates, the purchase price for the company came in at a multiple of 2.5x 2010 Ebitda of AUD21m. The transaction will be financed with AUD22.5m in cash and an additional AUD30m in debt, to be borrowed at a rate of anywhere between 6% to 7% from a yet-to-be-determined Australian bank, Zignani added. Volgren was advised by UBS, consulting firm MGI Melbourne and Australian law firm Arnold Bloch Leibler. Marcopolo retained PricewaterhouseCoopers to advise on the acquisition. The deal comes shortly after Petros, the Petrobras employee pension fund, announced it had increased its position in Marcopolo to 15% of preferred shares, or 9.29% of the company’s total capital.
Category: Regions
Oaxaca Nears MXP Bond
The Mexican state of Oaxaca is close to raising MXP1.947bn ($140m) through the sale of a 15-year domestic bond. Pricing is scheduled for Thursday, if market conditions permit. The issuer is heard looking to pay between TIIE+125bp-130bp. Proceeds are marked for general corporate purposes. Interacciones is leading the transaction, rated AAA on a local scale.
El Paso Aims for 1Q Brazil Asset Sale
US gas company El Paso is expected to divest its Brazilian assets, along with the rest of its exploration and production business, by the end of the first quarter of 2012, says a person close to the transaction. Since the acquisition of El Paso by Kinder Morgan earlier this year, the pipeline company has been hawking its global E&P business in a sale that analysts estimate at $8bn. The bulk of the assets are the company’s US shale plays, but roughly 3% of the company’s total consolidated reserves, as measured in millions of cubic feet of natural gas equivalent, are located in Brazil, according to the company’s latest 10K filing. “The process is ongoing,” Bill Baerg, investor relations manager for El Paso, tells LatinFinance, referring to the sale. Baerg says the company plans to sell the bulk of its assets in one transaction but will have to seek different buyers if one single transaction is not viable. The company has retained Barclays and Evercore, the same firms that advised in Kinder Morgan’s $21.2bn acquisition of El Paso agreed in October. In Brazil, El Paso owns a 100% working interest in the offshore Pinauna and Camarao fields, a 25% stake in the Camarupim field and 35% stake in the Pescada-Arabaiana fields.
Pequiven Gets Nearly All in Tender
Petroquimica de Venezuela (Pequiven) is set to repurchase $247.6m in outstanding 8.29% 2020 bonds following the close of a tender offer, it says, or 99% of the $250m original face value amount. Most of the bonds were tendered prior to the December 6 early tender date. The petrochemical producer paid accepting holders $1,049.70 per $1,000 principal if they accepted by December 6, and $1,000 if after. Due to scheduled amortization payments, as of the November 22 launch date, there was $952.00 in principal for each $1,000 original principal, meaning about $238m needs to be spent in the buyback.
Afores Seek Returns in EM
Mexican pension funds should be given greater freedom to diversify into growing EM economies rather than be limited to investments in sluggish developed nations, say participants at a recent Mexico-US Chamber of Commerce event in New York. Rules that emphasize foreign investments in the US and Europe make little sense at a time when such options often present more risks than opportunities. “How is it that Mexico’s [pension funds are] allowed to buy Greek debt but can’t invest in most emerging economies?” asks Alonso Cervera, managing director of emerging markets and fixed-income research at Credit Suisse. At the moment, Mexico’s pension funds can invest in 40 eligible countries, but only four of them are emerging markets, namely Brazil, Chile, India and China. Regulators are aware of the dilemma and have expressed a willingness to loosen such restrictions. “There is a huge opportunity to move money to EM economies or fast growing Asian economies,” says Pedro Ordorica, president to Mexico’s national commission for retirement savings CONSAR. “We are pushing legislators to remove one of the most challenging things for us. Perhaps in the next administration.” For now, the Afores can only allocate 20% of their portfolios in foreign assets and about 60.6% of that is invested in the US, followed by Brazil at 14%. Perhaps because of the limited options Afores have yet to reach their foreign thresholds, with just $11.5bn, or 9.63% of total assets under management, invested abroad. Of that amount, most is dedicated to foreign equity (77.2%), with 22.8% in debt. Mexican pension assets under management now stand at $119.5bn, or 11.5% of the country’s GDP.
Abengoa Project Preps Bond Takeout
Abengoa Cogeneracion Tabasco (ACT) is heard to be preparing investor meetings this week via Credit Suisse for an up to $600m senior secured 2032 bond, after Fitch and S&P assigned a BBB minus ratings to the offering. The bulk of financing is expected to take-out bank debt, while the remainder will cover construction costs to build a gas fired co-generation plant that will operate within a complex owned by Mexican state-owned oil company Pemex (BBB), which is the sole off-taker. ACT is a special purpose vehicle owned by subsidiaries of Spain’s Abengoa and GE Capital. In 2009, both companies signed a 20-year PPA with Pemex to construct, operate and build the facility that is expected to cost $743.5m, $143.5m of which comes from the sponsors in the form of equity. In 2010, Abengoa closed a $460m 7-year loan to build the 300MW facility through structuring and syndication agent Santander. The facility pays a step-up spread starting at Libor plus 412bp for the 36-month construction period, and rising to 437bp through month 48, 462bp through month 60, and 562bp through month 78. The project is expected to be completed in September next year. According to a person familiar with transaction, about $367m of the bond’s proceeds will pay outstanding bank loans, about $79m will cover an engineering, procurement and construction (EPC) contract, $44m for interest payment during the project construction, $23m for the service reserve account, and $65m for swap termination costs and a letter of credit agreement. As positives, Fitch cites the low completion risks, as well as sponsorship from companies with a strong track record in this area.
Banamex Plans Debt CCD
Banamex has filed for a new certificado de capital de desarrollo (CCD) issuance in the Mexican market, but with a twist. Unlike most CCDs, this fund will invest in debt rather than private equity, with the idea of providing the Afores with a broader – and higher-returning – array of debt investments. Afores have had a limited menu of investment options in the Mexican market where, according to the filing, between 2003-2011 just 16 issuers have accounted for over 80% of certificados bursatiles offerings, and almost all of them had a local rating of double A or higher. In contrast the new CCD will invest not only in plain-vanilla debt, but also in subordinated, high-yield, private, mezzanine, and distressed debt, as well as pre-IPO lending and structured finance. Similar to most other CCDs, holders will receive all proceeds until 105% of their investment is returned, and after that, 85% of the proceeds. No size has yet been put on the 7-year deal, though most CCD transactions raise MXP1bn-MXP4bn ($80m-$325m). It will join a relatively long queue of CCD issuers that have been waiting in a pipeline in what has been a slow year for the asset class. With the debate over capital calls finally settled, it is hoped more CCDs will see the light of day. Credit Suisse is managing the transaction, and will also invest 10%.
US Operator Buys Telefonica Mexico Towers
American Tower, a US operator of telecommunications towers and sites, has agreed to acquire 2,500 telecom towers in Mexico from Pegaso PCS, the Mexican subsidiary of Spain’s Telefonica, for $500m. Neither party involved in the deal hired financial advisors, and American Tower used its own in-house M&A group, say a spokeswoman for American Tower. Stearns declined to provide any valuation multiples for the purchase. The company said in a statement that the tower acquisition doubled its portfolio of assets in Mexico, a bet on the future growth of the telecom business in that country.
Banco de Bogota Brings Debut
By sticking to a shorter tenor and enticing investors with an attractive pickup to rival Bancolombia, Banco de Bogota was able to draw a decent crowd for its debut bond in a market that is not necessarily enamored with the FIG paper. After turning heads with 5.5% area talk on a $500m 5-year, Banco de Bogota was able to revise guidance lower to 5.25% (+/- 1/8) and upsize to $600m before pricing at 98.894 with a 5.00% coupon to yield 5.25%. Books swelled to around $3.25bn as investors comped the credit (Baa2/BBB minus) against Bancolombia’s 2016s (Baa3/BBB minus), which were trading between 4.25%-4.375%, a spread differential that leads were heard justifying by the maturity extension and the bank’s debut status. The bonds were trading up 0.45-0.75 points in the grey, according to an investor. The transaction raises funds to take out half of a $1.2bn 1-year bridge loan used to expand into Central America through the $1.9bn acquisition of Panama-based BAC-Credomatic in July 2010. Banco de Bogota is also raising a $500m 3-year syndicated loan, which is documentation nd expected to close later this week. Citi, HSBC and JPMorgan managed the sale, and were also leads on the bridge and loan as well.
CFE Puts Local Trade to Bed
Mexico’s Comision Federal de Electricidad (CFE) has sold a MXP1.358bn in ($100m) floater in the domestic market. The 4-year notes priced at TIIE+35bp, in line with guidance of TIIE+ 35bp-40bp and 10bp wide of initial price expectations. Demand was heard at 1.3x, with participation coming from pension funds, bank treasuries and mutual funds. The deal wraps up the last issuance under the MXP3bn Fideicomiso de Administracion de Gastos Previos trust. The state-owned utility uses the Bancomext-guaranteed trust to pre-fund subcontractors’ authorized expenses under a special infrastructure program that cannot be reimbursed before project completion. Ixe managed the transaction, rated AAA on a national scale. CFE had previously visited the domestic market in September when it raised MXP7bn from a reopening of its 2014 and 2020 bonds, after seeing more than MXP13bn in demand.