Following the announcement of its fourth straight quarterly loss, Cemex has asked to rework bond covenants. The cement maker announced that it has agreed to pay a 25bp fee in order to make the changes, and will pay 100bp if it does not raise $1bn in equity or equity-linked securities by the end of 2011. In return, Cemex gets to reset its maximum consolidated leverage ratio to 7.75x 12-month trailing Ebitda through June 2011, decreasing gradually to 4.25x by year-end 2013. Previously it was to be 6.75x though the end of this year, before falling gradually to 3.5x by year-end 2013, according to Barclays. Cemex also reset its minimum consolidated coverage ratio to 1.75x during 2011-2012, and 2x through year-end 2013, from previous requirements of 1.75x to the end of 2011, 2.0x by June 2012 and 2.25x by year-end 2013, according to Barclays. Cemex also notes amendment to the terms of the reserve of its domestic bonds to improve liquidity and refinancing risk management, without elaborating further. Shares rose 7%, to MXP10.84, and bonds tightened 25bp, according to a report from Scotia. While Scotia notes likes the bonds from a fundamental perspective, “for spreads to rally, we think Cemex needs to demonstrate an inflection point in the downward trend in prices and volumes in order to reassure investors,” it says.
Category: Regions
ECM Kicks Off Diversity Month
LatAm equity investors are gearing up for at least 6 scheduled deals in the next 3 weeks, including a trio on Thursday. Though only OHL Mexico’s MXP15bn IPO should turn heads in terms of size, diversity seekers will be encouraged in that only 1 in 6 is Brazilian. The group should test enthusiasm for ex-Brazil equity, which may be keen following continued Petrobras overhang and that market’s most recent IPO, HRT, trading down 6.3% in the 2 days trading since debut. Following recent enthusiasm in the bond markets for Argentina, real estate developer TGLT is set to price Thursday what would be that country’s first IPO since 2007, for $100m-$130m equivalent. The subscription period launched October 21, with a ARP9.00-ARP11.50 range for the sale of 45.4m shares, with the possibility of upsizing to as much as 61.8m. Raymond James Argentina is managing the sale. Elsewhere, Brasil Insurance is set to raise more than BRL500m Thursday, through the sale of 191,000 primary and 191,000 secondary units, with the possibility of a 15% greenshoe and 20% hot issue. The IPO – welcome as a play away from commodities – has a BRL1,250-BRL1,450 range, and is led by Morgan Stanley, BTG Pactual, JPMorgan and HSBC. Meanwhile, Peru’s Exalmar is shooting for more than $100m in what would be that country’s first domestic IPO since 2007. Elsewhere, Mexican homebuilder Sare is also looking to raise Thursday up to MXP805m through a follow-on sale of up to 317m primary units, through BBVA and Santander. Sare closed Tuesday at MXP3.10. The Mexican market is most anticipating OHL, coming between November 4 and November 11 at MXP24-MXP30, which should test appetite for size in that market. Finally, metals processor Molymet is looking to raise more than $200m, in a follow-on that would be Chile’s first deal since March.
Elementia Lands at Guidance
Mexico’s Elementia has issued MXP3bn in 2015 bonds at a spread of TIIE plus 275bp, according to one of the leads. This was in line with 275bp area guidance. The bonds were issued to finance operating costs and to refinance outstanding debt, including half of the debt from any existing $450m 5-year term loan. Moody’s assigned a Ba3 rating to the bonds and a Ba3 corporate family rating to Elementia with a stable outlook. Inbursa and Arka were the leads.
Nestle Ecuador Preps Securitization
Nestle’s Ecuadorean unit plans to raise $74m through a 4-tranche accounts receivable securitization, according to a report from Fitch subsidiary BankWatch Ratings del Ecuador, which assigns a AAA domestic rating. In what would be its second such transaction, the food products company plans a $20m 3-year 7.25% coupon tranche, a $15 5-year 7.75% tranche, a $35m 7-year 8.25% piece featuring a 1-year grace period, and a $4m 7-year subordinated slice paying 8.75%. The deal is guaranteed by future sales in Ecuador and follows a $70m ABS in 2008. There is not yet a timetable for the deal, as it has not been approved by regulators.
Peru Fish Anchors IPO For a Week
Peru’s Pesquera Exalmar expects to IPO on November 4, instead of Thursday as initially planned. The fishmeal and oil producer is waiting a week to accommodate international buyers needing to complete regulatory formalities, according to a source close to the transaction. Exalmar plans to sell 57.5m primary units and 54.4m secondary to both domestic and international investors. Exalmar does not indicate a value or price range, as the level will be set through an auction. It says in a prospectus that the sale should raise more than $100m. Proceeds are marked for repaying debt from recent acquisitions, buying boats, and expanding the footprint in Peru’s southern coast. Santander, Citi and Interbank are managing the sale, set to be the first Peru IPO since Interbank holdco Intergroup sold shares in 2007.
Alfa Seeks Loan For Eastman Purchase
DAK Americas, a unit of Mexican conglomerate Alfa, is acquiring Eastman Chemical’s polyethylene terephthalate resins business and related assets and technology of its Performance Polymers segment for $600m. Enrique Flores, director of corporate communications at Alfa, says the company is in talks to obtain a 3-year bullet credit facility to finance the acquisition. Terms have not been set and Flores declines to disclose which banks Alfa is talking to, saying only that the loan is likely to be syndicated due to the size of the transaction. The deal includes 3 petrochemical plants in South Carolina. Alfa estimates that the business generated revenue of $405m in H1 2010. Carlos Peyrelongue, equity analyst at Bank of America Merrill Lynch (BAML), says that the price is fair and potential synergies could make the deal non-dilutive. Martin Gonzalez, equity analyst at Mexico-based Invex, says the acquisition will strengthen Alfa’s polyester business while expanding its presence in North America. The deal is expected to close by year-end. BAML advised Eastman. Flores declines to say what financial advisors Alfa worked with.
Banobras to Issue up to MXP7bn
Mexico’s Banobras is expected to issue up to MXP7bn in 4 year bonds today, rated Aaa by Moody’s on a national scale. The rating is based on the bank’s status as a government-related issuer. Investors expect the bonds to price flat to TIIE – 4.87% Monday – which they say is fair for the credit. Banobras provides financing for states and municipalities, specializing in infrastructure projects. Banamex is the bookrunner.”
CFE Looks to Syndicated Loan Market
Mexico’s CFE is looking to raise a syndicated loan, according to market participants, who expect it to be pre-funding for 2011. Mexico’s electricity commission has a $605m loan maturing January 19, according to Dealogic. BBVA, Santander, Credit Agricole, Citi, BNP Paribas and SG were leads on the original transaction, which took place in July 2007. Francisco Santoyo, CFO at CFE, told LatinFinance in September that the company would look to pre-fund for 2011 in order to cushion itself against potential external shocks.
PDVSA Sells $3bn Bond
PDVSA says it has issued $3bn in new 2017 bonds, getting nearly $7bn in demand from 105,307 orders. The B+ 8.5% bond priced at par. As with previous government offerings, the offer is directed at individuals and businesses with the “sector productivo nacional,” what Venezuela calls businesses that are strategically important the nation’s economy and investors will be allowed to buy the dollar-denominated bonds with Bolivars at a VEB4.30 per dollar rate. Separately, PDVSA will offer holders of its 0% 2011 bond new 8% of 2013 bonds at an exchange rate of $1,125 per $1,000 if done by October 28, and $1,095 per $1,000 if done later. Citi ran the new issue and is managing the liability management.
Carvajal Trades Comolsa for Pamolsa
Colombian conglomerate Carvajal Internacional is exchanging a 60% stake in Colombiana de Moldeados (Comolsa) with local investment firm Fama for a 37% stake in Peru-based Peruana de Moldeados (Pamolsa). Oscar Dario Morales, vice president of finance at Carvajal, tells LatinFinance his firm will hold about 90% of Pamolsa and Fama will own about 95% of Comolsa. Morales says terms are still being discussed. Pamolsa has annual sales of about $65m-$70m a year, while Comolsa’s annual sales are around $45m-$50m, he adds. Morales says that Comolsa, which produces cardboard packaging, is not part of Carvajal’s core business, while Pamolsa, which makes plastic packaging, is. In a separate transaction, Carvajal sold a 63% stake in Musicar, a music provider, another non-core unit for about $5m, Morales says. Fellow Musicar shareholders Caracol Radio and Valorem, which owned the remainder of the company, also sold stakes to a group of investors that includes former Carvajal and Musicar management, Morales says. Musicar accounts for less than 1% of Carvajal’s revenue and the deals were privately negotiated, Morales says.