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.
Category: Regions
BNDES Authorized to Fund Eletrobras’s EDP Bid
BNDES would be able to finance Eletrobras’s bid for a stake in Portuguese state-controlled power company EDP under a new rule change. The government of President Dilma Rousseff has adjusted BNDES’ statutes, allowing the bank to use proceeds from external markets to fund the acquisition of assets or for projects and overseas investments by Brazilian companies. The move is being interpreted by observers as an indication that the development bank has been sanctioned to finance the high-profile acquisition. A BNDES spokeswoman says that the decree is very clear that only funds obtained overseas can be lent for asset acquisitions of this sort. That said, she notes, no final decision has been reached yet on any Eletrobras’s financing for the EDP transaction. Eletrobras and fellow Brazilian utility Cemig are part of a group of bidders for a 21.35% stake in EDP. Germany’s E.ON and China’s Three Gorges are reportedly also included in the bidding, the details of which are not yet public.
Rabobank Sells UF2m in Chile
Rabobank has raised UF2m (87.4m) in a Chilean domestic bond sale. The Dutch bank priced the inflation-linked 5-year bullet at 96.99 with a 3.05% coupon to yield 3.75%, or government bonds plus 128bp. Demand was 1.5x, according to a banker on the deal. Proceeds will be used to fund the bank’s operations. The bond is rated AAA on a national scale. Celfin and Deutsche Bank managed the sale.
Peru Holds Rates
Peru’s central bank has decided to keep the country’s benchmark interest rate at 4.25%, in line with expectations. The decision takes into account factors including lower growth in spending, international financial risks, and an increase in inflation, the bank says.
BBVA Chile Talks MXP Price
BBVA Chile is heard targeting a TIIE+60bp spread for a new 3-year floating rate bond, its first in the Mexican local market. The level would be in line with a similar spread paid on Banco de Chile’s recent MXP1.5bn ($111m) 3-year bond. BBVA Chile is planning to become the fourth Chilean issuer to tap Mexico’s domestic market, and is looking to issue up to MXP2bn. The timing of the sale has yet to be determined. Proceeds will be used to fund bank operations. BBVA Bancomer is leading the transaction, rated AAA on a national scale.
Urbi Poised for Local Bond Sale
Urbi Desarrollos Urbanos (URBI) is expected to price up to MXP1bn ($74m) today in the Mexican domestic bond market. Price talk for the Mexican homebuilder has widened out to TIIE+370bp-380bp area, from an earlier indications of TIIE+350bp. Proceeds will be used to refinance existing long-term and short-term debt. With the proposed issuance, Urbi will have no substantial debt maturities until 2014, says Moody’s, which rates the deal A3 on a national scale. BBVA is managing the sale. Urbi last visited the bond markets in January 2010, issuing $300m in a cross-border sale.
Canadian Buys Brazilian Auto Parts Operation
Cosma, a unit of Canada’s Magna International, has agreed to purchase the Brazilian auto parts unit of ThyssenKrupp Automotive Systems, further cementing its presence in LatAm. Officials at Cosma and ThyssenKrupp decline to discuss the transaction amount or its valuation metrics. Cosma is a manufacturer of automotive metal body structures, as well as other components and parts for vehicle chassis. ThyssenKrupp’s four Brazilian production plants generated sales of approximately $250m in the fiscal year to September 30, Magna says. Pawel McNicol, managing director of Cosma says that the deal was done with no financial advisors for either party. On the legal front, however, Cosma did retain the services of Pinheiro Neto Advogados, while ThyssenKrupp was advised by Lobo & de Rizzo. Magna currently owns 9 production plants and two research centers in South America.
Argentine Miner Set for Canada Dual Listing
Argentina-based miner Patagonia Gold plans to list on the Toronto stock exchange December 7, after receiving final approval. Its shares will continue to trade on the AIM section of the London exchange. It operates the Cap-Oeste and Cose projects in Southern Argentina.
Mexichem Rebuffed As It Ups Offer For Wavin
Mexichem has improved an unsolicited offer for Dutch pipemaker Wavin, but saw the move rejected by the target company. The Mexican petrochemical company offered EUR9.00 in cash per ordinary share of Wavin, up from the EUR8.50 offered on November 22. Although “certain progress has been made on non-financial items…the proposed offer price of EUR9.00 per share is not acceptable as this price materially undervalues the company and its prospects,” say Wavin. At EUR9 per share, Mexichem is assigning the Dutch company an enterprise value to Ebitda multiple of roughly 7.5x, assuming equity of $450m, net debt of anywhere between $300m to $330m and an Ebitda of $100m to $105m, says a person familiar with the transaction. Barclays and Citigroup are advising Mexichem, and Bank of America Merrill Lynch is doing the same for Wavin. Wavin shares closed Tuesday at EUR7.83, down 0.89%.
Rabobank Set for Chile Bond
Dutch bank Rabobank has revived plans to issue bonds in Chile’s local markets, this time targeting an up to UF2m in 5-year bullet. The bank had been initially eyeing a sale last week, including the options of a UF-denominated tranche with a 3.05% coupon and a peso tranche with a 6.05% coupon. Proceeds will be used to fund the bank’s operations. The bond is rated AAA on a national scale. Celfin and Deutsche Bank are managing.