Mexican fertilizer company Fertinal rejects rumors suggesting that it is for sale. “We’d have to be very stupid to be thinking about selling things now,” a senior company official tells LatinFinance. “Everything is worth 50% of what was worth a year ago,” adds the source, who asks not to be identified. He blames a general downturn in valuations and dampened appetite to spend. Instead, claims the executive, Fertinal is considering what it describes as offers by potential lenders, though the he would not disclose what type of institution the company had talked to. The private company, which the executive claims should be worth $2bn-$5bn, raised an undisclosed amount of debt a year ago to reignite operations after having lain dormant for 7 years. Fertinal, which engaged UBS last summer to advise on strategic options, says it is interested in terming out this debt to some 7.0 years and with a commercial lending base, from around 4.5 years today. The executive would not disclose the source of funding, but suggested it was done on a bilateral basis. Any new debt would have to be at a minimum tenor of 5 years. Bankers away from the company say it was rumored to be seeking a sale for up to $5bn. Fertinal specializes in phosphate-based fertilizers. It apparently picked UBS for its knowledge of petrochemicals and the fertilizer industry.
Category: Regions
CCM Reaches Agreement with Banks
Mexico’s Comercial Mexicana has reached an agreement with Mexican creditors to suspend legal proceedings until March 2. The troubled retailer is negotiating with creditors to restructure liabilities. The deal complements one reached with US creditors, also lasting through March 2. CCM defaulted on debt payments in October after losses in forex derivatives due to the global financial crisis, and faces counterparty claims of $2.2bn while recognizing only about $1.1bn. A Mexican court twice rejected the company’s request for protection from creditors while it pursues restructuring negotiations. Credit Suisse is advising CCM.
Franco-Nevada Gets 50% of Palmarejo
Canada’s Franco-Nevada has agreed to acquire a 50% interest in Mexico’s Palmarejo silver and gold mine from Coeur d’Alene Mines. The deal is valued at $80m, with $75m being paid in cash and the remaining $5m to be paid in “special warrants that are each exercisable to purchase one common share of Franco-Nevada for no additional consideration,” says Coeur. A Coeur d’Alene spokeswoman says that no financial advisors were involved and that the company approached Franco-Nevada on its own.
S&P Junks Cemex
S&P has lowered Cemex’s rating to BB+ from BBB minus. The downgrade reflects S&P’s expectations that earnings will be hurt by slowing economies in the US, Mexico and Spain. Though it has termed out some 60% of the debt due 2009, S&P says the maturities this year will still be relatively high in relation to expected cashflow. Cemex used short-term debt to finance the $14.2 billion purchase of concrete maker Rinker in July 2007 just as the US construction market faltered, boosting leverage. It has so far agreed with lenders to refinance $2.7bn in debt tied to the acquisition, pushing maturities out to 2010 and 2011, in a process it hopes to wrap up by March. S&P’s rating remains on credit watch negative. Fitch cut Cemex from investment grade to BB+ in November. Global comps Holcim and Lafarge were also lowered Thursday, to BBB and BBB minus, respectively, also on worsening economic conditions.
Panama Forges $1.1bn Stimulus
Panama president Martin Torrijos has announced that in light of the global financial crisis, the government will create a $1.1bn financial stimulus program to provide credit to local banks and financial entities so they can extend credit to their clients. The program’s funds, to be managed by the National Bank of Panama, will come from CAF, the IDB and the bank itself. Torrijos explains that this is “not a subsidy program or a financial rescue” but instead a “preventive measure” that will “not increase public indebtedness.” JPMorgan thinks this is good news. “We welcome the Torrijos administration’s efforts to shield Panama from a protracted global financial crisis,” the shop says, adding that the funds constitute 4.8% of GDP.
Colombian Utility Places Local Bonds
Colombian utility Empresas Publicas de Medellin has sold COP250m ($111m) in 3 and 10-year bonds. It placed COP138.6bn in 2019 bonds initially paying 5.80% and linked to the IPC inflation rate. EPM also sold COP36.7bn in 2012s initially paying 1.49% and linked to DTF rate. IPC stood at 191.63 Thursday, and the DTF 9.62%. A COP74.7bn tranche of fixed-rate 2019 bonds meanwhile priced at 10.80%. Demand reached COP573.6bn for the notes rated AAA on a national scale, says the issuer. Citi managed the sale. EPM plans to use proceeds to help fund COP1.8bn in 2009 investment needs.
Mexico Baker Sliced After M&A Sealed
Mexican baker Bimbo has closed its purchase of Weston Foods’ US unit for a total of $2.5bn, it said Thursday. The announcement prompted Moody’s to confirm its downgrading of the credit to Baa2 from Baa1 and its local rating to Aa2.mx from Aaa.mx. “The Weston Foods acquisition significantly enhances Bimbo’s business profile in the US and improves the company’s geographic diversification, but also weakens its credit metrics because of a material post-transaction debt load,” says Moody’s analyst Sebastian Hofmeister. The ratings remain on review for further downgrade. Moody’s had been planning a downgrade, noting that the jumbo deal was almost entirely financed with debt. Bimbo took out a $2.3bn M&A loan, of which $600m matures in December 2009. Lead banks BofA, BBVA, Citi, ING, HSBC and Santander are looking to syndicate the deal to MLAs and retail. Bimbo is heard seeking to sell tickets of $212.5m that pay up front fees of 150bp on a 3-year and 175bp for 5-year portions. The margin on the 3-year facility is Libor or TIIE plus 250bp, while the 5-year offers 300bp. Participants may lend in either MXP or USD.
Genworth Sheds Mexico Unit
Genworth Financial has agreed to sell its Genworth Seguros Mexico unit to HDI-Gerling International. The transaction is valued at $45m, a Genworth spokesman tells LatinFinance, and should be finalized in 6-9 months after regulatory approval in Mexico. The acquisition includes the automobile, property and casualty, life and personal accident insurance business lines. The sale allows Genworth to focus on life insurance, whereas the Mexican shop is driven by autos, unique in the company. The spokesman declines to name the advisors on the transaction.
Colombia Cuts GDP Forecast
Colombia may have reduced its GDP growth expectations for 2009 to 3.0% from 3.5%, but Credit Suisse and JPMorgan believe the forecast to be too optimistic. Credit Suisse has chopped its 2009 real GDP growth forecast for Colombia to 2.0% from 2.6%, citing the “dismal” performance of industrial production in the fourth quarter. JPMorgan, meanwhile, forecasts GDP growth of 2.5%. Credit Suisse also says the central government’s prediction of an overall deficit of COP16.3bn or 3.2% of GDP is “overly optimistic” and predicts, on a preliminary basis, that it will be slightly above 4.0% of GDP. However, the shop expects the government to be able to fund its borrowing needs.
Colombian Utility Readies Bonds
Colombian state-owned utility Empresas Publicas de Medellin plans to sell as much as COP250bn ($111m) in 3 and 10-year bonds today. EPM is offering 3-year bonds paying interest linked to the DTF inflation rate, 10-year bonds linked to the IPC inflation rate and 10-year bonds paying a fixed coupon. Pricing will be determined by auction. EPM plans to use proceeds to help fund the utility’s COP1.8bn in 2009 investment needs. The offer is the second from a COP1bn program, and follows a COP367bn sale in November. Citi is managing the transaction.