Brazil’s EBX and global sports and media company IMG Worldwide have purchased sports agency Brasil 1 Sports and Entertainment for their recently created entertainment joint venture IMX. The holdco for Brazilian billionaire Eike Batista’s group of companies, signed a 50-50 joint venture with IMG in November with the aim of turning it into the leading sports, entertainment and arena company in the country. The IMX venture’s portfolio of projects includes the Volvo Ocean Race, the LPGA Brazil Cup, the Travessia dos Fortes open water marathon and the Ultimate Fighting Championship. A spokesman for EBX could offer no valuation details of the transaction and said the total amount paid for Brasil 1 will remain confidential. He could not immediately say if the partners used any financial advisors.
Category: Regions
City of Lima Sounds US Accounts
The City of Lima has been sounding out the US buyside about an international bond, says one investor who has talked to municipal officials about such a possibility. Citigroup has been coordinating some discussions, according to this investor, but other banks are also heard talking to the borrower. The municipality is thought to be considering a debut $500m in sol-denominated bonds. Fitch rates the City of Lima’s foreign and local currency long-term debt at BBB minus.
Mexico’s Alsea Grabs Italian Chain
Mexican food and beverage franchise operator Alsea has purchased Italcafe, the parent company of Mexico’s Italianni’s restaurant franchise, in a transaction valued at MXP2.05bn ($149.5m). The deal includes the purchase 8 Italianni units as well as an 89.8% stake in Grupo Amigos de San Miguel, which controls 34 of Italianni’s restaurants across the country. The purchase also includes the fee use of the Italianni’s brand name for up to 30 years, free of franchise royalties. An Alsea spokesman declined to offer any more details on the transaction or reveal advisors until Alsea holds a press conference, scheduled for Monday. The Alsea document does point out, however, that the companies agreed to an enterprise value-to-Ebitda multiple valuation of 8.5x, assuming an Ebitda of the last 6 months up until June 2011 of MXP241.5m ($17.6m). Notably, the deal includes a clause that allows Italcafe to cancel the sale if a due diligence review now underway determines an Ebitda of less than MXP218m ($15.9m). At that level, the 8.5x multiple agreed by the parties would yield a $135.15m price tag for the Italcafe franchise. Alsea said it plans to finance the deal with the help of 4 loans obtained from HSBC, Banamex, Santander and BBVA Bancomer, at tenors of 5 years each. Alsea is known as the operator for brands such as Starbucks, Dominos Pizza and Burger King in Mexico. Company officials have expressed an interest in expanding locally and in other parts of South America.
PDVSA and Rosneft Ink Heavy Oil JV
PDVSA has signed a memorandum of understanding with Russia’s Rosneft on a deal to develop the Carabobo 2 oil project, one of three heavy oil projects planned by President Hugo Chavez. Rosneft will take a 40% stake in the joint venture and 60% will remain in the hands of PDVSA, in line with the 2 other ventures signed with foreign oil companies, Rosneft said in a statement. Company officials at Rosneft and PDVSA could not immediately be reached for comment. The deal would give Rosneft a stake in the development of the Carabobo 2 North and Carabobo 4 West blocks, estimated to hold 40bn barrels of crude and a hand in the creation of a crude upgrading plant to turn heavy oil into a more marketable crude. Once online, the fields are expected to produce up to 400,000 barrels of crude a day and the oil upgrading plants should offer a 200,000 barrel a day processing capacity. As agreed, Rosneft will pay $440m upon congressional approval of the deal, and $660m more once the final investment decision is made with PDVSA. The Russian oil company will also make available to PDVSA a $1.5bn credit facility, with disbursements capped at $300m a year. The two companies also signed additional agreements for joint ventures that will offer drilling and construction services to the heavy oil ventures. Global oil players such as the US’s Chevron, Spain’s Repsol and Malaysia’s Petronas have secured spots in the Orinoco oil ventures hoping to gain a place at the table in one of the richest pieces of oil real estate in the world. Venezuela holds one of the world’s largest reserves of heavy oil.
Cemex Comfortable with Covenants
With a sooner-than-expected windfall from the Venezuelan government and a steady reduction of bank debt, Cemex feels comfortable meeting loan covenants going into the first half of next year, though this may be a different story as leverage ratios become more stringent by the end of 2012. “We have said we are highly confident that we will meet our year end [2011] covenants. If you take a look at our operating cash flow there is little question we will not do it,” says Maher Al-Haffar, vice president of public affairs and investor relations at Cemex. This comes as the borrower continues to contemplate ways to access the capital markets to cover a $6.7bn debt payment in 2014, wean itself off bank debt, and generally “de-risk” its balance sheet. “Bond holders will become more important,” says Al-Haffar. Fortunately for the cement company, it has some breathing space ahead of its 2014 payments at time when markets are still largely closed to high-yield names like Cemex. But this doesn’t mean that it will not take a proactive approach to capital market forays. “We have a track record at Cemex of being extremely anticipatory, and we know these things are not to be taken lightly,” he says. The company is poised to receive a sooner-than-expected windfall from the Venezuelan government, which has agreed to pay $600m equivalent as compensation for the assets taken in a nationalization campaign in 2008. Venezuela will make an initial payment of $240m in cash and $360m in securities issued by state-owned oil company PDVSA. Payment is expected anytime up to until December 12, after which time the company will clarify details about the PDVSA securities and what it intends to do with the proceeds. Al-Haffar indicated that proceeds could in theory be used to pay down debt and hence lower the amount of growth required to comply with covenants that call for leverage ratios of 6.5x by June 2012. Going forward, however, it may be a struggle to reach the 5.75x threshold set for the end
Infonavit Prices MXP RMBS
Mexico’s Infonavit has issued MXP1.1bn ($82m) of RMBSs backed by Infonavit mortgages in the domestic market. The state mortgage lender locked in its lowest coupon this year, with a UDI-denominated 2039 that was priced at 4.45%, inside talk of 4.50%, or 264bp over the government’s UDIbonos. The transaction was heard 1.7x oversubscribed after over 40 accounts participated, including private banking clients, insurance companies, investment funds, pension funds and bank treasuries. Proceeds will be used to create new mortgages. Banamex managed the sale, rated AAA on a local scale. Infonavit plans to issue a third RMBS under its MXP6bn program in February 2012 through Banamex and HSBC.
Petrotemex Closes Loan Amendment
Mexican petrochemical company Petrotemex has closed an amendment to its $600m loan after watching several European and Chilean banks decline to participate, and BBVA joining as a newcomer. Originally used to finance the company’s acquisition of Eastman Chemical’s PET business in the US, the facility keeps the original pricing structure, but changes from a 3-year bullet into a 5-year amortizer. The 5-year will require a $125m payment in 2013, $75m in 2014, $200m in 2015 and $200 in 2016, all in quarterly payments, with a smaller amortization in 2014 when the company has a bond maturing.
Spain’s BBVA joined the facility, while Credit Agricole, RBS, Banco de Chile and BCI dropped out. Existing bankers were paid upfront fees of 65bp, while new money entrants got 85bp. The amendment still paysLibor+300bp out of the box and was 10% oversubscribed. On the original transaction, Inbursa, Santander, ING, Credit Agricole and Bancomext came in as MLAs, while Scotia, Banco de Chile, Banorte and Bank of America participated as arrangers. Bank of Tokyo Mitsubishi, Bladex, Mizuho and Wells Fargo had been committed as managers. Credit Suisse and HSBC led the amendment.
Urbi Builds Local Issue
Urbi Desarrollos Urbanos has sold MXP600m ($44m) in Mexico’s domestic bond market. The homebuilder’s floating-rate bonds were priced at TIIE+400bp, wide to the TIIE+370bp-380bp expectations. The book size was heard at MXP700m with around 50% participation coming from institutional investors. Proceeds will be used to refinance existing long-term and short-term debt.. BBVA Bancomer managed the sale, rated A3 on a national scale. Urbi last visited the bond markets January 2010, issuing $300m in a cross-border sale.
Banco de Bogota Bond Gets BBB Minus Rating
Fitch and S&P have each assigned a BBB minus rating with stable outlook to Banco de Bogota’s proposed USD senior unsecured notes. Colombia’s second largest lender is looking to raise a total of $1bn to in the bond and loan markets to pay back a 1-year $1.2bn bridge loan used for acquisition financing. The borrower was due to wrap up meetings with bond investors in New York and Los Angeles Thursday with Citi, HSBC and JPMorgan. Banco de Bogota is heard considering a $500m bond with a possible 10-year tenor, according to an investor who met with the name, but nothing had been announced as of late Thursday. Banco de Bogota is in the process of syndicating a $500m 3-year loan at Libor+225bp.
Delta Takes Gol Stake
Delta Airlines has agreed to acquire a minority stake in Brazil’s Gol Linhas Aereas Inteligentes for $100m, in a deal that may cause some Gol shareholder dilution. The US carrier is expected to pay $100m for preferred shares in the hands of controlling shareholders at a rate of BRL22.00 ($12.25) per ADS, Gol says. The stake is estimated to be about 2.9%, Citi says in a report. As part of the deal, the controlling shareholders will issue new ADS in a capital increase of BRL280m, and Delta will receive a seat on the board of the low cost Brazilian carrier. The deal came at a 53% premium over Gol’s Tuesday close, noted a person close to the transaction. Morgan Stanley and law firm Milbank, Tweed, Hadley & McCoy advised Gol. Executives at Gol told analysts in a conference call that the transaction will lead to synergies but they would not yet quantify these. Some observers expressed reservations about what the deal would mean for Gol’s minority shareholders. “We are concerned that the controlling shareholders are selling a position in the company at a bid premium versus Tuesday’s close…Preferred shareholders will get a much better deal, versus the dilution faced by minority shareholders, once the capital increase occurs,” Citi says. Gol shares closed Wednesday at BRL15.59.