Minera Andes board has approved of a revised bid the company from existing shareholder Robert McEwen. McEwen, who already has a 24.3% stake in Andes, is also a director at the company. The executive has said he will make the CAD40m purchase across two tranches, worth CAD19m and CAD21m each. The first tranche will be used to satisfy the cash call made for Minera Andes’ 49% interest in the San Jose Project in Argentina, while the second, which is subject to shareholder approval, will involve McEwen’s assumption of a bank loan from Macquarie Bank that is coming due presently, according to the company, which does not provide details on the debt. His revised offer follows an initial proposal to buy 121m shares at CAD0.33 per share, for a total of CAD40m. McEwen’s offer follows Hochschild Mining’s announcement earlier this year that it would make a second and formal bid of for all outstanding shares of Minera Andes that would have an implied price of CAD0.8658 per share. Hochschild has withdrawn its offer following Minera Andes’ acceptance of McEwen’s proposal.
Category: Regions
Stanford Fraud Rattles LatAm
LatAm regulators have been engaged in damage control since Texas-headquartered Stanford Bank was accused by the SEC on Tuesday of engaging in massive fraud. In Colombia, Stanford’s brokerage unit, Bogota-based StanfordEagle, voluntarily suspended operations and is returning funds to investors, says an analyst who works there. “We never saw this coming. It took us completely by surprise,” he says. According to data from the local securities regulator the brokerage had COP21.5bn in capital at the end of 2008. In Venezuela, the finance ministry says it has seized Sociedad Mercantil Stanford Bank, which has 15 local branches, and says it plans to sell the institution. The ministry also says potential acquirers have already expressed interest. In Antigua & Barbuda clients stormed the Stanford-owned Bank of Antigua to withdraw their funds, but the Eastern Caribbean Central Bank says that an inspection of the bank reveals it is in sound condition. “The Bank of Antigua has sufficient liquidity at its offices and reserves at the central bank to meet the requirements of the public and its customers under normal circumstances. However, if individuals persist in rushing to the bank in a panic they will precipitate the very situation that we are all trying to avoid,” the bank says in a statement. And Mexico’s banking regulator says it is investigating the local Stanford bank affiliate, Stanford Fondos, for possible violation of banking laws. It also says it has not seized the bank nor has it frozen its assets. Securities regulators of Ecuador and Peru have suspended the operations of local Stanford units, they say.
Pimco Sees Strong Mexico Fundamentals
The fundamentals of the Mexican economy are strong, according to a Pimco executive, though the country and other EM economies will be competing with US high yield corporates for investor cash. “Fundamentally, the Mexican economy is in much better shape than other emerging economies,” says Lupin Rahman, vice president of EM portfolio management at Pimco, speaking on a panel at LatinFinance’s Cumbre Financiera Mexicana. “Looking at the EM space, Mexico is definitely a country that most investors would feel comfortable in, as it has great fundamentals versus the rest of the EM space,” she says. For non-dedicated investors, however, making the case for Mexico is much more difficult, especially in a risk-averse environment, she adds. Providing competitive returns versus known US names will be a challenge for all of the emerging markets, according to Rahman. The manager declines to indicate how Pimco is positioned in Mexico, or what sectors might be the most compelling. Looking ahead, Rahman says she believes the full deleveraging process for EM corporates and investors is a question of several quarters, if not years. “I can’t say I see a strong recovery in 2009,” says the investor, noting that the rebound in Mexico or emerging markets is a matter of resolving core economic problems in developed markets. In December, Pimco had up to $45bn allocated to LatAm, including local markets, from a portfolio worth over $800bn.
OHL Clinches Peru Road Concession
The government of Peru says it has awarded Spain’s OHL Concesiones the right to build a 360km long highway along the country’s coastline between the cities of Pativilca and Trujillo. OHL says it will invest $400m in the project but does not say how it intends to finance it. The concession is for 25 years, including the construction period, according to government information.
APR Energy Scores Electroperu Contract
APR Energy’s Peruvian unit has nabbed a $45m contract with Electroperu. Under the contract, says Electroperu, APR will generate up to 60MWof electricity for the Trujillo Norte substation. Electroperu says it will provide financing for the $45m, but does not disclose terms. Alfredo Sauza, an engineer at Peru’s ministry of mines and energy, says the contract was awarded through an auction process. He also explains that the Trujillo Norte substation is among the most important on the grid known as Sistema Electrico Interconectado Nacional.
Mexico’s Nafin Bolsters Auto Industry
Mexican development bank Nafin says it is offering MXP9.5bn worth of loans and guarantees to support Mexico’s local auto industry. It is extending a credit line of MXP4.0bn to institutions that lend to auto manufacturers and another MXP4.0bn in guarantees to banks with exposure to the sector. In addition, it is offering MXP1.5bn in credit line guarantees to banks lending to distribution companies. Spokesman Alejandro Rodriguez says the funds are already being disbursed, but does not disclose the terms of the credit lines. Local press reports a level of TIIE+5%. Some of the banks participating in the program are BBVA Bancomer, Banamex, HSBC and Banco del Bajio.
Mexico Autoparts Firm Renegotiates Debt
Autoparts maker Nemak, a unit of Mexico’s Grupo Alfa, is in talks with bank lenders to adjust terms on its debt, say executives away from the proceedings. The unit is said to be Alfa’s most indebted of three subsidiaries. In December, Nemak sought waivers for its financial covenants after taking a hit related to FX-related derivatives. According to terms outlined in an October 2007 $640m 5-year term loan, Nemak pledged to keep its interest coverage ratio at or above 3.0x and its net debt to Ebitda at 3.5x or less, says a banker away from the lending group. HSBC, Citi, BBVA, Standard Chartered, BNP Paribas, EDC, Comerica, ABN AMRO and BofA were the leads. The loan’s pricing moved on a grid between 65bp and 85bp over Libor, and was last quoted at the top end of that range. Nemak apparently blew through those covenants last year, but has apparently been granted waivers, say bankers. It is heard now to be in talks with lenders, possibly to amend those covenants – a process that would involve improving the banks’ compensation for the added risk. The 5-year loan has a 3-year grace period, which means the company may not be forced to fully restructure, says a banker on the deal. In addition to the syndication, Nemak raised MXP2.5bn in a November 2007 sale of 2014 floating rate notes via BBVA and HSBC. It reopened that issue in May 2008 for MXP1.0bn via HSBC. If the notes carry similar covenants, they will likely have to be addressed too. This could involve a more complicated discussion and potentially an exchange, says a banker away from the talks. A recent Santander report says Nemak’s maturity schedule appears manageable in the short term, with $25m coming due in 2009 and $151m in 2010. An Alfa spokesman declines to comment on debt talks. In 2008, Grupo Alfa posted a net loss of $361m owing in part to some $277m in FX derivative related losses, according to the company.
Mexican Bottler Eyes Bond Sale
Embotelladoras Arca is targeting Wednesday for the issuance of 13-month bonds, according to a banker managing the sale. The Mexican bottler is heard eyeing around MXP1bn in floating-rate notes and has filed for up to MXP2bn in either fixed or floating. Arca plans to use proceeds to help repay MXP2.3bn in bank loans carrying 11.5% interest due in April and November taken out from Inbursa and BBVA, which are also managing the new issue. The deal is seen as an important test for AAA issuers trying to find a benchmark in the local market. It follows a MXP2bn placement of 13-month paper from competitor Coca-Cola Femsa at TIIE plus 80bp in January. Bankers not running Arca say it will likely price more than 100bp over TIIE, citing credit differences and likely less retail involvement for the pickup versus Femsa, which was anchored roughly 50% by individuals.
BNP Mexico Unit Adds to CP
BNP Paribas Personal Finance has placed MXP350m in 364-day commercial paper in the Mexican market at a fixed rate of 9.89%, according to a banker managing the sale, adding to its placements of short term (under 1-year) notes in previous weeks, totaling MXP1.4bn. Scotia managed the transaction. The BNP unit is one of a group of Mexican issuers using this market while longer tenors are challenging. Retailer Liverpool priced last week MXP700m in 1-year notes at the TIIE plus 150bp, through Santander. Volkswagen Leasing is another issuer expected to make its CP debut soon, also through Santander.
ICA Takes Road Contract
Empresas ICA has won a MXP1.2bn contract for highway expansion work in central Mexico from toll-road operator Fideicomiso Autopistas y Puentes del Golfo Centro. The builder will expand a road running from Mexico City to Pachuca. The work is expected to last 2.5 years. The company does not detail how it plans to finance the project.