Category: Regions

Infrastructure developer Grupo Mexicano de Desarrollo (GMD) is seeking $64m in financing to develop a wharf at the Terminales Portuarias del Pacifico, says a company spokeswoman. She adds that Carbonser, a joint venture GMD set up with Techint, and Cemex unit Transenergy, offered the winning bid to develop the project in 2006 and had lined up financing from Hypo’s local subsidiary. However, she adds, Hypo ran into trouble afterward, leaving the venture without financing, which has become very difficult to come by. The developer seeks to build the wharf and will operate it for 30 years to recoup its investment. Meanwhile, State of Mexico has assigned to GMD the construction of the first phase of the Bicentenary Viaduct project in Zumpango. The first phase, says GMD, is estimated to cost MXP400m. A GMD spokeswoman says she expects GMD to be assigned all three phases of the project, which would require a total investment of almost MXP1.5bn. “This was not an auction, the government selected GMD for the project since we have worked together in many projects before,” she says. State of Mexico will pay 20% up front and the rest in installments.

Few, if any, lenders expect ICA and Goldman Sachs to take out a 7-year MXP32bn mini-perm used to acquire the Farac I concession, any time soon, given the poor state of cross border and local Mexican markets. Those anxious to get out will have to take a deep breath, as a bond sale to pay down the jumbo local currency loan is definitely a ways off. “We are working with Afores to see what their interest is,” Alonso Quintana, CFO of ICA, tells LatinFinance. “We have 7 years to do this,” he adds. In 2007, some lenders in the facility expressed frustration at the sponsors’ lack of transparency on timing of the takeouts, which they expected would take place within several months of the loan funding. The facility was led by Santander, Dexia and NordLB, with WestLB, ING, Inbursa and Banobras as MLAs. IDEAL’s July 2008 placement of MXP7bn in local bonds backed by tollroad assets sparked hope that a similar transaction could be executed for Farac takeouts. While the IDEAL deal seems to have confirmed the structure’s viability, a plan to actually to do so is still a ways off. The notes were placed with local pension and mutual funds.

Moody’s has chopped Mexico’s CIE to B2 from Ba3 and to Ba1.mx from A3.mx, citing weak liquidity, high refinancing risk and low free cashflow visibility. The outlook on the ratings is negative. “As of September 30, 2008, cash on hand plus marketable securities represented only 47% of adjusted short term debt maturities (which includes adjustments for factoring of accounts receivable and operating leases), down from 63% in June 2008 and 98% in December 2007. In addition, free cashflow has been negative, mostly because of high working capital needs,” Moody’s notes. It adds that the company has maturities coming up soon. They include MXP80m in local CP due in March, MXP280m in local notes due in April, MXP500m in local notes due in December and MXP650m in local notes due April 2010. The company also has MXP1.4bn in local notes maturing in October next year.

Mexico’s Vitro plans to miss $44.8m in interest payments due Monday to preserve cash so it can continue operations. The glassmaker owes $12.9m on its 8.625% of 2012 bonds and $31.9m on its 9.125% of 2017s, and will have a 30-day grace period. The decision was prompted by a notice of default from 4 bank counterparties to Vitro derivative contracts, claiming a lack of payments totaling $293m. Vitro has been in discussion with derivative counterparties since disclosing a negative position of $227m in October that reached $358m as of year-end. Blackstone, Vitro’s advisor on the derivative and debt processes, told bondholders this week in a conference call to organize and seek legal counsel, according to a bondholder who participated. The call did not give further details of the company’s plans, the investor adds. Officials at Vitro and Blackstone decline to comment on the process. The outstanding total amount of the bonds is about $1.2bn. Meanwhile, Moody’s put on review for possible downgrade the Baa1 rating of the certificates VENACB 05 of Covisa, Alcali and Comercializadora issued in 2005 by ABN AMRO as trustee. The certificates are backed by trade receivables generated by Covisa and Alcali, which are glass container subsidiaries of Vitro.

Pemex’s 2019 bond issued Tuesday was trading up slightly late Thursday, in the 99.40-99.75 range, according to traders. The bond priced at 99.313, about 20-30bp wide of where the Mexican state-owned oil company’s 2018’s traded at the time. The 2019 has outperformed, traders say, closing the gap to trade on top of the 2018. The 3x demand for the issue, as well as the aftermarket performance of the Codelco 2019 7.5% bond issued last week, has given LatAm high-grade corporate issuers a wider window to work with. Pemex sold $2bn in 2019 notes paying 8.00%, priced to yield 8.25% or UST+570bp, through HSBC, Citi and Calyon.

Colombian food company Grupo Nacional de Chocolates (GNC) has agreed to acquire Mexico’s Nutresa, which makes chocolates, for $95.3m. The deal, says GNC, is valued at 10x Ebitda. The buyer says it will use financing from banks and cash on hand to make the acquisition. “This transaction fits perfectly with GNC’s strategy and will strengthen its chocolate business in the strategic region that includes Mexico as one of the most attractive markets,” the buyer says. GNC does not reveal if it hired a financial advisor to help with the deal, but an analyst who covers the company speculates that Bancolombia’s investment banking unit may have been involved, since both have worked together before. The analyst says GNC has little debt and, as of September, about COP150bn in cash. An analyst at Colombia’s Bolsa y Renta says the deal is the country’s largest M&A transaction of the past 12 months. The analyst adds that the purchase will help GNC increase chocolate sales by 14%, to COP930bn from the COP818bn expected previously. Bolsa y Renta has a hold recommendation on the stock. GNC did not return calls for comment and a Nutresa spokesman declines to provide any additional information. Bancolombia executives did not respond to calls. The transaction, which awaits approval from Mexico’s antitrust commission, is expected to close in February, says GNC. GNC shares gained 2.4% January 28 to close at COP15,100.