Gruma has concluded its derivative and debt renegotiations with banks, according to a statement filed with the bolsa. The Mexican tortilla-maker says it has finalized terms with its derivative counterparties on $738m in liabilities. The company says it has also refinanced a MXP3.4bn loan it has with Bancomext, setting up a new facility due 2019 with a 3-year grace period. And a $197m 5-year syndicated loan led by BBVA is also being extended, it says, without providing additional details. Goldman advised Gruma on the process.
Category: Regions
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Colinversiones Shows Interest in Epsa
Colombia’s Colinversiones, whose holdings are largely in the electricity generation and transmission sector, says it is interested in acquiring a stake in Valle del Cauca-based peer Empresa de Energia del Pacifico (Epsa) from Spain’s Gas Natural. “Colinversiones’ board has authorized the company to make an offer for Epsa, but we can’t comment on the amount to be offered or the size of the stake to be purchased,” says a Colinversiones spokeswoman. Gas Natural holds a 63% stake in Epsa, which it gained as part of a merger with Spanish rival Union Fenosa earlier this year. Although different Colombian bankers and analysts could not say what the potential value of Gas Natural’s stake in the company is, Epsa’s annual report for 2008 indicates revenue of COP1trn.
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Ruta del Sol Proposals Due October 20
Bids on a concession for Colombia’s Ruta del Sol tollroad are due October 20 and the winner could be announced about a month afterwards, says a banker who is advising one of the parties interested in bidding. He also confirms that among those preparing bids for the project, expected to require an investment of about $2.6bn, are Italy’s Impregilo, Canada’s Lavalin, Spain’s OHL, Brazil’s Odebrecht and OAS, also based in Brazil. Colombia-based Odinsa, which is teaming up with Ascendi, part of Portugal’s Mota-Engil, also confirms it will bid. Ruta del Sol will stretch over 1,000km and connect Bogota with the ports on the Atlantic coast.
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China Seen Striking Mutually Beneficial Pact
As China becomes the most important trade partner for many LatAm nations and looks to lend and acquire more in the region, both sides appear positive that the relationship is a win-win long-term, despite concerns to the contrary. “The relationship is mutually beneficial. Even as China shifts from an export-driven economy to one more focused on consumption, that doesn’t imply a decrease in the need for Latin raw materials,” Steven Puig, vice president at the IDB tells a panel at a LatinFinance forum in Beijing. However, the concern is that LatAm is parting with commodities at the bottom of the value chain, only to buy them back as finished goods. “They are complimentary economies,” says Gerardo Mato, co-head of global banking for the Americas at HSBC, noting the opportunity for infrastructure projects in LatAm to obtain long-term financing. He says the 2 sides are getting closer, but a greater and better flow of information will be the key to bridging what is still a large gap. Zhu Hongjie, vice president at China Eximbank says Chinese investment in LatAm should grow faster and come easier than it did in, for example, Africa, due to LatAm’s more rapid development. The panel was also optimistic that Chinese investment could move beyond commodities. “There is a misperception in China that overseas investments offer lower returns [than Chinese equities]. This is not true,” says Cynthia Zhang, who helps manage $4bn in overseas assets at China AMC. She notes the medium to long-term attractiveness of not only infrastructure, but of banks and consumer staples sectors. All spoke at this week’s LatinFinance Latin America China Investors Forum in Beijing.
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Moody’s Fears CIE Refi Risk
Moody’s is reviewing for possible downgrade its B2 corporate family rating on Mexico’s Corporacion Interamericana de Entertenimiento (CIE) owing to a weak liquidity profile and ongoing refinancing risk. “The review for downgrade also considers deterioration in the company’s business prospects due to likely persistent weakness in Mexican consumer disposable income and a possible increasing tax burden caused by efforts of the federal government to boost tax collection, as illustrated by the government’s recent fiscal proposal,” says CIE. As of June 30, CIE’s cash plus marketable securities represented 22% of Moody’s-adjusted short-term debt maturities (which include factoring of accounts receivable and rents), down from 38% in December 2008 and 96% in December 2007. CIE’s scheduled debt maturities during the remainder of 2009 include MXP280m in local CP due in October and MXP500m in certificados bursatiles due in December. “In 2010, the company will continue to face significant debt maturities, including MXP650m in long-term notes (certificados bursatiles) due in April of 2010 and MXP1.4bn in long-term notes (certificados bursatiles) due in October 2010,” says Moody’s.
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Slim Unit Buys into Oil Driller
Carso Infraestructura y Construccion (Cicsa), owned by Mexico tycoon Carlos Slim, has acquired a 60% stake in Bronco Drilling MX, a subsidiary of Oklahoma-based Bronco Drilling, for about $30m. Bronco has also entered into a $75m revolving credit facility with Banco Inbursa, a portion of the proceeds of which were used to retire an existing credit facility. The remainder will be used for working capital and general corporate purposes. Draws under the facility will cost 5.80% over Libor. The facility includes a financial covenant that allows for a maximum total leverage ratio of 3.50x. The facility matures in September 2014. In addition, Bronco Drilling issued to Cicsa through Inbursa a detachable warrant exercisable for up to 5.44m shares of its common stock. The warrant has a 3-year term, and the exercise price is $6.50 from the closing date to the first anniversary of the closing date, $7.00 per share following the first anniversary of the closing date through the second anniversary of the closing date, and $7.50 per share following the second anniversary of the closing date through the third.
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Cemex Corrals Equity Bulls
Mexican cement giant Cemex has raised $1.63bn in an equity follow-on, upsizing the trade by 8% and scoring what bankers on it characterize as a reasonably tight discount. The fallen blue chip issued the equivalent of 130m of its ADS, up from a planned 120m, at $12.50, selling at a 3.8% discount to the Tuesday close price of $13.00, according to bankers on it. A subscription of more than 3x at the $12.50 level helped it grow, they add. A relatively small discount marks an initial victory for the company, since some analysts and investors had expected the troubled company to settle for a more substantial cut. It remains to be seen how the stock trades. The company’s lead banks have presumably accepted an offer to acquire an additional 15% of the issue as part of their greenshoe option, and that now needs to be traded into the market. “Transactions like this are not the norm, especially in LatAm,” says a sellside executive running the deal. He notes that the company’s global reach, liquidity and repositioning as a turnaround story helped draw a large portion of global and US-oriented accounts, in addition to the usual EM and LatAm dedicated investors. “Some managers are using the deal as an opportunity to return to an equal-weight position in Cemex [from underweight,]” says a LatAm analyst at a bank involved in the trade. This may help explain some of the strong bid for the deal, he adds. Much of the decision-making surrounding valuation appears to focus on the company’s US business, making this offer somewhat of a proxy for a broader view on a US recovery, according to bankers and analysts. Cemex’s own forecast for its US cement business assumes 3 consecutive years of 11% growth, says the analyst close to the deal, adding that he thinks this is overly optimistic and investors should not be including those kinds of numbers into their models. Proceeds are earmarked for repayment of bank debt, of which Cemex has some $15bn coming due by 2014. JPMorgan, Citi, Santander an
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Fitch Positive on BCP’s Performance
Fitch has upgraded Banco de Credito del Peru (BCP) to BBB from BBB minus to reflect the bank’s strong performance through the economic crisis. Fitch expects that the bank’s capital levels, which have strengthened as growth slows, should remain at levels somewhat higher than historically during periods of growth. In spite of a deteriorating economic backdrop, BCP managed to maintain a very good – albeit declining – asset quality and sustain adequate reserve coverage while achieving high profitability and strengthening its capital. The bank had ROAE of 26% and a ROAA of 2.0% as of June, says the ratings agency.
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BNP Changes LatAm Guard
Lodewijk Spoorenberg, head of Americas for energy, commodities, export and project finance at BNP Paribas, is relocating back to Europe for a senior role in corporate and investment banking (CIB). Louis Bazire becomes head of CIB LatAm, excluding Mexico which will be run by Everett Schenk, head of CIB for BNP Paribas North America. Bazire, formerly BNP’s Brazil head, will remain in Sao Paulo. He was appointed to the Brazil post in September 2007, replacing Bernard Mencier. Bazire joined BNP in 1977 and has had various appointments, including in Mexico and Spain.
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Stephens Taps Blandon for LatAm-China Push
Boutique Stephens Cori Capital has hired former Morgan Stanley banker Maximo Blandon to focus on business opportunities between China and LatAm. “China is rolling out its strategy to provide capital to companies in Latin America, whether it be raw materials, energy, infrastructure or agriculture. These are key sectors that are going to be important for them in the future,” Blandon tells LatinFinance. “Investment opportunities continue to expand outside of the energy industry, and we are working with various Latin American and Chinese companies to identify synergies and investment opportunities,” he adds. By country, the focus is the Andean Region, Brazil and Chile. Stephens Cori, which has 6 bankers, focuses on corporate finance advisory work, including M&A, private equity, agented financings and restructuring in LatAm and the Hispanic US. It helps US companies enter LatAm, and European/LatAm companies enter the US, having particular expertise with family-owned companies and is a division of Stephens Inc, an investment bank headquartered in Arkansas. Blandon joins from MSCI-Barra, a former subsidiary of Morgan Stanley, where he was an MD in the finance department. Prior to that, he spent more than 15 years at Morgan Stanley, where he worked as an MD in the global capital markets team, including stints covering LatAm, Asia and North America.