AEI Sale of LatAm Assets
Category: United States
Posted inDaily Brief
American Tower Continues LatAm Purchases
American Tower, a US telecommunications infrastructure operator, continued its LatAm buying spree after agreeing to acquire 558 telecommunications transmission towers from Telefonica Moviles Chile, with their respective maintenance facilities, for CLP49.2bn ($95.7m). Telefonica Moviles Chile will continue using those facilities for its operations under a leasing agreement signed with American Tower’s local subsidiary ATC Sitios de Chile. Neither American Tower nor Telefonica Moviles could be reached for comment. The Chilean deal comes less than a month after American Tower acquired 2,500 telecom towers in Mexico, in a $500m deal with Pegaso PCS, also a unit of Spain’s Telefonica. The company used its own internal M&A group for the Mexican acquisition and no advisors were hired at the time.
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Vitro Sidesteps Legal Block to Restructuring
Mexico’s troubled glass maker Vitro managed to sidestep a restraining order preventing its subsidiaries from voting for a controversial $3.6bn debt restructuring that has bondholders up in arms. The US Court of Appeals for the Fifth Circuit reinstated the company’s Chapter 15 filing rights and eliminated a NY State Supreme Court’s mid-December restraining order blocking the company’s subsidiaries from voting in favor of Vitro’s restructuring plan. Vitro supported the move in a press statement and noted that “the NY State Court decision was not enforceable since our subsidiaries had already consented to the plan.” The glassmaker has used roughly $1.9bn in intercompany debt to give itself enough voting power to approve what has been largely an unpopular restructuring plan for other creditors. As it stands, the company’s restructuring proposal includes $814.7m in new 2019 bonds, a fee of up to $32.7m and mandatory convertible debt of $95.8m. JPMorgan has estimated that creditors who accept the deal may recover between 48 and 60 cents on the dollar, depending on the level of debt-holder support. Vitro’s move has aggrieved bondholders and caused other investors to worry about the repercussions that Vitro’s successful restructuring would have on the access to credit of other Mexican companies.
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ICC Awards $907.6m to Exxon for Venezuelan Assets
An International Chamber of Commerce (ICC) arbitration panel has ruled that Venezuela owes ExxonMobil $907.6m for the assets it took from the oil major in a nationalization drive four years ago. The ruling orders state-owned PDVSA to compensate Exxon, but the Venezuelan oil company will end up paying roughly $255m after taking several deductions. PDVSA will first deduct $191m that Exxon owed in connection with outstanding debt of the nationalized Cerro Negro project, an additional $300m that Exxon managed to freeze in a PDVSA account in New York, and $160m that the tribunal credited to PDVSA, the Venezuelan company says. Exxon officials could not immediately comment. The ruling came far below the $7bn-$10bb that Exxon originally sought as compensation for its nationalized assets. The final outcome for the compensation fight is yet to be decided, however, as Exxon has a pending arbitration case against Venezuela at ICSID, the arbitration unit of the World Bank. Since it took over the assets of foreign oil companies along the Orinoco river belt, PDVSA has argued it would pay only the book value of those assets and not the fair market value that the aggrieved oil companies sought to receive. The ruling comes at a time when Venezuela has stepped up its settlement of pending nationalization compensation payments to affected companies, including Mexican cement maker Cemex and Colombia’s retail chain Exito.
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Santander Makes New York Cuts
Santander was heard laying off some 15 people in its New York offices in December, including Marcia Vorona, an executive director in the LatAm structured finance group. Vorona joined Santander from ABN Amro in late 2008 after an RBS-led consortium took over the Dutch bank. This follows a series of LatAm cuts at other European institutions such as ING and RBS as they move to comply with Basel III rules and set aside more money for capital requirements to protect against the continent’s ongoing debt crisis.
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Vitro Restructuring Faces Court Order
A New York Court has slapped a temporary restraining order on Mexico’s Vitro, preventing its subsidiaries from approving a controversial $3.6bn debt restructuring plan that has irked foreign bond holders. Judge Bernard Fried, of the NY State Supreme Court, has ordered Vitro subsidiaries to “withdraw their consent” to the plan. Under the restructuring, Vitro would relieve its subsidiaries of serving as guarantees for outstanding debt. Vitro plans to appeal the ruling, Roberto Riva Palacio, a Vitro spokesman, tells Latin Finance. Riva Palacio points out that Vitro’s legal team set up a Monday hearing with Federal Bankruptcy Judge Harlin D. Hale who approved Vitro’s Chapter 15 filing, to request a stay of this order. Riva Palacio could not immediately comment on what the standing restraining order means for the already-approved restructuring plan. The glassmaker used roughly $1.9bn in intercompany debt to give it enough voting power to approve what was largely an unpopular restructuring plan for other creditors. As it stands, the company’s restructuring proposal includes $814.7m in new 2019 bonds, a fee of up to $32.7m and mandatory convertible debt of $95.8m. JPMorgan has estimated that creditors who accept the deal may recover between 48 and 60 cents on the dollar, depending on the level of debt-holder support. Vitro’s move has aggrieved bondholders and caused other investors to worry about the repercussions that a successful restructuring such as Vitro’s could mean for Mexican debt investors in the future.
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ING Sheds LatAm Jobs
ING has shed jobs across its LatAm trading, research and DCM groups as the bank moves to comply with Basel III rules and set aside money for capital requirements, says a person with knowledge of the situation. Approximately 20 odd employees are heard being let go in New York and to a lesser extend in Mexico. While the cuts are seen reflecting the diminishing importance of LatAm for the Dutch bank, ING isn’t retrenching altogether. It has kept some research, sales and some DCM people on board, including some in Brazil, and will continue to focus on local currency and interest rate products in LatAm. Its EM hard currency business, however, is being abandoned.
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El Paso Aims for 1Q Brazil Asset Sale
US gas company El Paso is expected to divest its Brazilian assets, along with the rest of its exploration and production business, by the end of the first quarter of 2012, says a person close to the transaction. Since the acquisition of El Paso by Kinder Morgan earlier this year, the pipeline company has been hawking its global E&P business in a sale that analysts estimate at $8bn. The bulk of the assets are the company’s US shale plays, but roughly 3% of the company’s total consolidated reserves, as measured in millions of cubic feet of natural gas equivalent, are located in Brazil, according to the company’s latest 10K filing. “The process is ongoing,” Bill Baerg, investor relations manager for El Paso, tells LatinFinance, referring to the sale. Baerg says the company plans to sell the bulk of its assets in one transaction but will have to seek different buyers if one single transaction is not viable. The company has retained Barclays and Evercore, the same firms that advised in Kinder Morgan’s $21.2bn acquisition of El Paso agreed in October. In Brazil, El Paso owns a 100% working interest in the offshore Pinauna and Camarao fields, a 25% stake in the Camarupim field and 35% stake in the Pescada-Arabaiana fields.
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US Operator Buys Telefonica Mexico Towers
American Tower, a US operator of telecommunications towers and sites, has agreed to acquire 2,500 telecom towers in Mexico from Pegaso PCS, the Mexican subsidiary of Spain’s Telefonica, for $500m. Neither party involved in the deal hired financial advisors, and American Tower used its own in-house M&A group, say a spokeswoman for American Tower. Stearns declined to provide any valuation multiples for the purchase. The company said in a statement that the tower acquisition doubled its portfolio of assets in Mexico, a bet on the future growth of the telecom business in that country.
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Batista Adds to Sport Entertainment JV
Brazil’s EBX and global sports and media company IMG Worldwide have purchased sports agency Brasil 1 Sports and Entertainment for their recently created entertainment joint venture IMX. The holdco for Brazilian billionaire Eike Batista’s group of companies, signed a 50-50 joint venture with IMG in November with the aim of turning it into the leading sports, entertainment and arena company in the country. The IMX venture’s portfolio of projects includes the Volvo Ocean Race, the LPGA Brazil Cup, the Travessia dos Fortes open water marathon and the Ultimate Fighting Championship. A spokesman for EBX could offer no valuation details of the transaction and said the total amount paid for Brasil 1 will remain confidential. He could not immediately say if the partners used any financial advisors.