Mexichem has made an unsolicited offer to acquire Wavin, a Dutch plastic-pipe manufacturer, a move that the Mexican chemical company says would create the largest PVC tube maker in the world with sales of over EUR4bn. Mexichem is making a cash offer of EUR8.50 per ordinary share. Wavin confirmed it has received an “unsolicited indicative non-binding” offer for all its outstanding shares. The company has said its board will consider the proposal and has retained Bank of America Merrill Lynch (BAML) to advise in the deal. Mexichem has brought in Barclays Capital and Citigroup as financial advisors and Allen & Overy as legal advisors. Last year Wavin generated EUR1.2bn in revenues and, most recently, posted Ebitda of EUR35.8m in Q3 of 2011. In September Mexichem closed a $1bn 3-year revolver intended to provide it with the necessary resources to take advantage of acquisition opportunities. Tied to a ratings grid, the loan offered L+90bp out of the box for utilization of less than 33%, 95bp for utilization of between 33%-67% and 100bp for over 67%. Spreads tighten or widen by 20bp for each ratings notch above or below BBB minus. Leads were Bank of America, BBVA, Citigroup, HSBC, JPMorgan and Santander.
Category: Regions
Santander Targets Early December for Chile FO
Santander Chile is targeting the week of December 5 for a secondary share equity follow-on that is expected to raise close to $1bn. The Spanish parent is looking to sell 7.8% of the Chilean unit held by the Teatinos Siglo XXI Inversiones vehicle, to strengthen its capital position, as part of a larger selldown that also involves reducing its stake in its Brazilian operation. But completing a deal before the year-end could prove tricky given the size of the transaction and questions over whether Santander Spain will be forced into further sales in the future. “In this scenario, with a weak progress in the operational indicators and the possibility of selling a larger stake if the Spanish situation should deteriorate further in the future, it is unlikely that we will see a significant participation from [domestic] institutional buyers,” local Chilean shop BCI says in a report. With Santander looking to sell 14.74bn shares, represented by 14.19m ADS, the transaction could reach $930m in size based on Tuesday’s closing ADS price of $65.50. Official timing has yet to be released, but sources familiar with the deal say the issuer is considering the week of December 5, if market conditions allow. The offer is to include an international and domestic portion. Santander, Bank of America Merrill Lynch and Credit Suisse are managing the international portion, while Santander and LarrainVial will handle Chilean orders. The announcement follows the renewal of a shelf to sell secondary shares of Santander Brasil. Santander could sell up to 8.2% of the Brazilian unit in a transaction that would fetch north of $2bn, though it has yet to specify any offering plans. ECM bankers away from Santander who have worked on previous transactions for the bank say the Brazil selldown could come in several small pieces – as the bank has been doing – or through a sizable marketed follow-on such as Santander Chile’s. However, such a deal would be unlikely due to poor overall market conditions an
Fitch Lowers Hovensa to BB Minus
Fitch has downgraded Hovensa’s senior secured debt rating to BB minus from BB+, putting its outlook back to stable from negative. Hovensa is a joint venture between Hess and Venezuelan state-owned oil company PDVSA, and operates in the US Virgin Islands. The ratings downgrade affects some $750m of debt, including bonds maturing in 2022 and a senior secured bank revolver. The agency cites high capex requirements and higher-than-expected financial support for the project as reasons for the downgrade “Given weak refining economics and higher capital costs, Fitch believes the project will continue to require liquidity from the its revolving credit facility and working capital support from Hess and PDVSA,” it says.
Pequiven Launches Bond Tender
State-owned Petroquimica de Venezuela (Pequiven) has launched a cash tender offer for any and all of its $238m outstanding 8.29% of 2020 bonds issued by the FertiNitro Finance unit. The petrochemical producer is offering holders $1,049.70 per $1,000 principal plus accrued and unpaid interest if they accept by December 6, and $1,000 if creditors tender after the early bird but before expiration on December 20. Due to scheduled amortization payments, as of the date of this offer there is $952.00 in principal for each $1,000 original principal. Pequiven also notes that holders of approximately 79% of the bonds have entered into a lock-up agreement with Pequiven to tender all of their bonds on or prior to the early tender date.
GrupoSura Adds Grupo Bolivar to ING Deal
The Colombian Grupo de Inversiones Sudamericanas (GrupoSura) has taken on Sociedades Bolivar as a second minority shareholder in the pension and insurance business it recently acquired from ING for $3.76bn. Sociedades Bolivar, part of the Grupo Bolivar holding company which includes interests in the finance, insurance and construction businesses, has agreed to pay $400m for a 10% stake in the business. Last week, GrupoSura added the World Bank’s International Finance Corporation (IFC) as a partner with a 5% stake in exchange for $200m. GrupoSura officials have said they expect to take on as many as three minority partners that will control no more than 25% of the business. In July the company agreed to acquire ING’s assets in Chile, Colombia, Mexico, Uruguay and Peru for EUR2.68bn, consisting of EUR65m in assumed debt and EUR2.615bn in cash. At the time, the deal valued the ING assets at a 1.8x book value, or 18x estimated 2011 earnings on a GAAP basis. As such, the deal came at the high end of analyst estimates for the value of the assets.
S&P Revises Barbados’s Outlook to Negative
S&P has revised Barbados’s outlook to negative from stable, while also affirming its BBB minus foreign currency rating. Large fiscal deficits and rising debt burdens threaten the government’s credit profile. “The negative outlook reflects our view that downside risks to Barbados’s creditworthiness are increasing as the external financial and economic environment weakens,” says S&P analyst Olga Kalinina in a statement. “We believe that domestic fiscal measures may not be sufficient to stabilize the growing debt burden.” Without fiscal adjustments, net general government debt will probably stay at around 52% of GDP between 2011-2013, while interest expenses will consume 13% of government revenues of up until 2014, the agency adds.
Curacao Gets A Minus Rating
S&P has assigned an A minus long-term rating to Curacao, with a stable outlook, citing its prosperous economy and stronger balance sheet thanks to recent debt relief from the Dutch government. The agency also believes that the recent decision to raise retirement age to 65 from 60 should also strengthen the public sector pension system over the next decade. Several factors are constraining Curacao’s ratings including low per capita GDP and limited monetary flexibility, it adds.
Investors Drawn to Lindley Debut
Rarity value, a strong local bid and divergent pricing views all helped Peru’s Corporacion Lindley generate a $2bn plus book Friday for its $320m 10-year bond, a transaction that marked an international bond debut for the company. The popularity of the sector and Lindley’s status as the official Coca-Cola bottler in Peru didn’t hurt either. “It was in the strike zone. It is Coke and from a corporate perspective, it has what investors are looking for, scarcity and new name value,” notes one rival banker. A BB+/BBB minus split rating and a dearth of true comps made the transaction a true exercise in price discovery. Indeed, several accounts struggled to place the credit in an appropriate category. Talk at 7% area may have seemed cheap from an investment-grade perspective, but expensive if the credit was still considered double B. One London-based EM portfolio manager thought the deal was mispriced, but participated nonetheless after initially comparing it to lower rated Peruvian credit Intercorp Retail’s (BB-/B1) 8.875% 2018s, which were priced earlier this month and were trading at 8.55%-8.45% last week. Arguably the borrower benefited from the broad swath of investors eyeing the trade and the subsequent price tensions this created. Lindleys’ strong name recognition helped drive robust demand from locals and meant that leads had more than their fair share of accounts tugging at their sleeves. Indeed, according to some, this left little room for cross-border participation, and may explain way the bond was trading up at +1.50-+1.75 in the grey before it priced at par to yield 6.75%. The new issue will bring net-debt-to-Ebitda to around 4x, but plans are afoot to reduce that to 2.5x by 2015, assuming 9% annual growth. Citigroup and JPMorgan managed the bond transaction. The Lima-based company produces, bottles, and distributes Inca Kola and other carbonated and non-carbonated drinks.
CFE Readies International Meetings
Mexico’s Comision Federal de Electricidad (CFE) will meet fixed-income investors in the US at the end of this month, just 6 months after it last came to the international markets. The Baa1/BBB/BBB rated borrower will see accounts beginning November 30 in Los Angeles and Boston before wrapping up in Chicago and New York on Thursday, December 1. CFE last came to the dollar market in May when it issued a $1bn 2021 that was priced with 4.875% coupon to yield 4.976% via Bank of America Merrill Lynch, Deutsche Bank and Goldman Sachs. Those bonds were trading around 102.85-103.10 or 4.50%-4.47% last week. On this occasion, BBVA, BNP Paribas and Citigroup are taking the government-owned electricity company on the road.
UMS Moves Closer to Samurai Sale
United Mexican States (UMS) may issue its Samurai as soon as December as it looks to consolidate its presence in the Japanese market with a transaction that is not guaranteed by JBIC. “Our next step is to issue without a JBIC guarantee and allow [the transaction] to take place in the last month of this year or early January,” Alejandro Diaz, the country’s head of public credit, tells LatinFinance. The sovereign has typically tapped the Samurai market using guarantees from JBIC, but has long hoped to sell plain vanilla bonds in this country. Mexico is flexible on size and tenor depending on risk appetite among Japanese investors, but ideally it is looking at a JPY-40-50bn ($519m-$649m) 5 or 10-year “We understand the first issuance may be in the lower part of the curve and we don’t have a problem with that,” Diaz says The sovereign would follow in the wake of America Movil (AMX), which in October became the first LatAm corporate to issue a Samurai without a JBIC guarantee. At the time, AMX tested the waters with a JPY12bn ($156m) a dual-tranche issue, selling a JPY6.9bn 3-year at par to yield 1.23% or yen Libor+80bp, and a JPY 5.1bn 5-year at par to yield 1.53% or yen Libor+100bp. UMS last issued in the Samurai market in 2010, when it placed a JPY150bn ($1.8bn) 10-year to yield 1.51%. Citigroup, Bank of Tokyo Mitsubishi, and Nomura took the sovereign to meet Japanese investors on a non-deal roadshow in August and will most likely assist with the next Samurai transaction, Diaz says.