Oil exploration and production company C&C Energy has scrapped the sale of its Colombia properties, deciding instead to invest in expanding exploration and production assets, says a source in the Canada-based company. Scotia Waterous had been advising the company, which in July was producing some 3,500 barrels of oil per day (boepd) and expects to increase that to about 4,600 boepd by the end of the year. The source tells LatinFinance that the company received “8 or 9” bids but none were to acquire the whole company, which was C&C’s aim. “We’ll be aggressive in acquiring new blocks and investing in developing infrastructure,” he says. The source adds that the company, which has hedged oil prices at “$65 or $66 boepd” for 2009, expects its cash flow to increase to $60m in 2010, based on a projection of $68-$70 per barrel, from $40m in 2009 and $33m in 2008.
Category: Regions
Air Jamaica Denies Sold to Spirit
Air Jamaica privatization committee chairman Dennis Lalor is rejecting a report in local newspaper the Jamaica Gleaner that the airline has been sold to Indigo Partners and Oaktree Capital, owners of low-cost carrier Spirit Airlines. In the letter, which LatinFinance has obtained, Lalor says the Gleaner story is “misleading.” He also says that the privatization committee has made a recommendation regarding a transaction, but that a sale has not yet taken place. Besides Spirit’s owners, other rumored bidders are Caribbean Airlines and tour operator Thomas Cook. Since March, the IFC has been assisting the airline, which has more than $600m in outstanding loans, in identifying prospective buyers.
Colombian Water Bonds Evaporate
A sale of COP190bn ($90m) in Colombian “bonos agua,” has been delayed, according to brokers managing the sale, following an auction process Wednesday that did not see the minimum amount of orders. It is not clear if and when another auction will be held. In the novel transaction for Colombia, issuer Grupo Financiero de Infraestructura will on-lend proceeds to a group of municipal governments to support water and sewage projects. The issue is to be the first from a UVR2bn (about COP375bn) program, under which the country’s state and municipal level governments can access credit to fund much-needed water and waste improvements, at rates they could never get on their own. In the transaction, structured by boutique Konfigura, 45 cities and one state will pledge future revenues to the trust to guarantee repayment of the bond. The group plans to do 1-2 bond issuances per year, as well as add new issuers to the scheme. Corredores Associados is managing the sale. Officials at Konfigura were not available to comment Thursday.
ICA Reopens Mexico Equity Market
Mexican developer ICA has raised MXP2.26bn by pricing 113m shares at MXP20.00, a 4.7% discount to Thursday’s close. Underwriters can place an additional 37m shares, which would bring total proceeds to MXP3.00bn. The discount is not small, but executives close to the trade say the company opted to price at a slightly lower level than the maximum price in the book to give investors a lift. This is ICA’s third visit to the equity markets in 4 years. The deal, which reopens the long-dormant Mexican market, was heard well oversubscribed, though further details on the book were not available late Thursday. At an FX conversion rate of MXP13.57, the implied ADR price is $5.90, where 4 ICA shares equal 1 ADR. The deal was placed 30% with locals and the rest internationally. Merrill Lynch is global coordinator, with Santander with joint books, and Citi and junior bookrunner. ICA paid its underwriters a 2.5% fee, according to a person close to the transaction.
Consortium Locks in Panama Canal Contract
The Panama Canal Authority (PCA) says it has awarded a concession for the expansion of its locks to a consortium that calls itself Grupo Unidos por el Canal. The $3.1bn price proposal by the consortium was by far the lowest offer, at around half of the value of the highest bid of $6.0bn. PCA says it will award the contract in the next few days, says. The consortium, made up of Sacyr Vallehermoso, Impregilo, Jan De Nul and Constructora Urbana, submitted a proposal whose cost falls below the ACP’s allocated threshold price of $3.5bn. Offers from two other consortia came in above the price. One consortium made up of Bechtel International, Taisei Corp. and Mitsubishi Corp. offered a $4.2bn price proposal, and the other, made up of ACS, Acciona, Fomento de Construcciones y Contratas, Hochtief Construction and ICA, offered $6.0bn. To fund the expansion, the PCA has already secured $2.3bn from multilaterals in the form of a 20-year loan package with a 10-year grace period. JBIC contributed $800m, with $500m coming from the EIB, $400m from the IDB and $300m each from the IFC and CAF.
Promigas Eyes COP Bonds
Colombia’s Promigas is preparing to sell up to COP400bn in domestic bonds, according to a ratings report from Duff & Phelps giving the issue its AAA local mark. The gas provider has the ability to place fixed-rate notes at up to 14% and floating-rate notes at the DTF rate plus up to 7% or the IPC index plus up to 9%. Tenors on each can range from 2 to 20 years, with a bullet maturity. A date for the sale has not been set. Separately, Colombia’s Banco Popular has approved a COP3trn ($1.43bn) domestic bond program. Bancolombia is selling today COP350bn-COP500bn in an auction involving fixed and floating rate notes with a tenor of 2-10 years.
Investors Download Telmex Floater
Telmex has sold MXP8bn ($596m) in domestic 2 and 4 year floating rate bonds, highlighting continued demand for blue chip issuers in Mexico. The telecom, cable and broadband provider priced MXP4bn in 2011 bonds at TIIE plus 74bp and MXP4bn in 2013s at TIIE plus 95bp. Total demand reached about MXP15bn, according to bankers managing the transaction, rated AAA on a national scale. Proceeds are marked for general corporate purposes, including debt refinancing. Inbursa and BBVA managed the sale. Telmex placed the maximum amount it had filed for, following in the footsteps of jumbo offers from Bimbo, Pemex, and CFE in the last 3 months. Prices continue to creep downward for AAAs, with Telmex paying in line with what quasi-sovereign Pemex paid for a 2012 floater in May. Bottler Arca got TIIE plus 100bp on a 2012 June 3. The next blue-chip to test the market should be Femsa, with a fixed and floating issue of up to MXP6n through BBVA and Santander expected as early as next week. Since the beginning of April, 4 of Mexico’s top issuers have sold MXP42bn to Afores, insurance companies and mutual funds.
Peru Expected to Ease Further
Barclays forecasts Peru’s central bank will make a 50bp cut to the monetary policy rate on July 9, bringing it down to 2.5%. However, it points out that recent central bank language may be consistent with a further 100bp cut. “We believe this is unlikely because of the moderation of other central banks’ actions, signs of activity already stabilizing in several parts of the world, the recent run-up of commodity prices, the sharp decline of the ex-ante real policy rate due to the 350bp of cumulative easing since January, and the central bank’s expectation that the government’s fiscal plan will add sizeable impulse to GDP,” Barclays says. Bulltick Capital, meanwhile, agrees with a 100bp cut. “With the collapse in inflation and dramatic fall in economic growth, we see room for the BCRP to cut another 100bp this week, bringing the benchmark policy rate to 2.0% where we expect it will remain by end-2009,” Bulltick says. It adds that June inflation data shows a steep fall, the second consecutive negative this year, bringing yearly inflation to 3.06% from 4.21% in May.
Chocolates Cooking Colombian Issue
Colombia’s Grupo Nacional de Chocolates plans to sell a domestic bond in the next few months. Details remain to be finalized, a GNC finance official tells LatinFinance, but the issue is expected to be COP500bn ($239m). It would be sold following Colombian regulatory approval, which should be in mid-August. Bancolombia has been hired to manage the process. In its last DCM foray, GNC sold $40m-equivalent in “Inca” bonds in Peru’s market in July 2008.
ETB Stake Sale Takes Off
Santander Investment Valores Colombia has set the rules and timeline for the sale of a stake in Bogota-based telephone company ETB to a strategic investor, the target says in a filing with the local securities commission. It adds that the city of Bogota, which holds an 80% stake, must still hold more than 50% after the sale. Potential bidders need to prequalify by September 24, proving that they possess a minimum of 1.5m fixed lines or 5m mobile access lines and 100,000 internet access lines. On the financial side, they must prove they had revenue of at least $1bn during the past fiscal year. Due diligence will begin today and end October 1. Initial offers should be made by October 6 and the whole process is expected to conclude by December 9. The legal advisor to ETB is Brigard & Urrutia Abogados. Local analysts who do not want to be identified say the most likely investors for ETB would be Telmex, Telefonica and EPM, which is majority owned by the city of Medellin. ETB has a market cap of about COP3.2trn.