Venezuela’s PdVSA has agreed to pay US companies Williams and Exterran for the gas compression and injection assets they lost to a Venezuelan nationalization campaign in 2009, the companies say. So far the government-owned oil company has paid a combined $121.6m to both companies as an initial payment for the assets at the WilPro El Furrial and WilPro PIGAPII, two natural gas ventures in the Andean country. An additional $239.8m will be paid to the two companies in several installments over the coming years up until 2016, according to the companies. At the time of the asset takeover, Williams held a 66.66% stake in El Furrial and a 70% stake in PIGAP II, with Exterran holding the remaining stake in these ventures. Exterran has received an initial payment of $37.6m for its participation in these ventures with a remaining $74.8m to be paid in the next 4 years. Williams in turn has received an $84m initial payment with $165m to be paid gradually until 2016. Williams has also received an additional $63m for its stake in Accroven, a venture that includes natural gas liquids extraction and feractionation plants, as well as storage and refrigeration facilities. Officials at Exterran declined to offer additional details of the compensation terms and how the money paid compares to the value of the assets lost. An investor relations officer at Williams could not immediately comment on the deal. PdVSA officials could not be reached for comment. As per the agreement with PdVSA, Williams and Exterran have suspended their arbitration against Venezuela pending the final compensation settlement. Over the past 6 months, Venezuela has sought to settle a number of outstanding compensation claims with companies that lost assets during the nationalization drive led by the administration of President Hugo Chavez.
Category: United States
JBS Again Grows Stake in Pilgrim’s Pride
Brazil’s JBS has spent $107.2m to buy an additional 18.9m shares in US chicken producer Pilgrim’s Pride (PPC). The purchase, which represents an offer of $5.69 per share, increases the meatpacker’s stake in the company to 75.3% from 68%, the company says. JBS’ purchase comes just days after announcing that it raised its stake to 68% from 67.2% during a recent PPC capital increase. The Brazilian company purchased practically all the remaining shares owned by company founder Lonnie “Bo” Pilgrim. A spokesman for JBS said the company sees the potential for further efficiencies at PPC in the process of transforming it from a chicken producer to a more global food producer. The spokesman dismissed talk that the price offered was a discount to the market price and would only say that the transaction was a privately negotiated block trade deal. Shares of Pilgrim’s Pride on Wednesday closed at $7.41, up 2.77% from the previous day’s close. PPC officials could not be reached for additional comment. PPC registered overall sales of $8bn in 2011 and has seen an average normalized Ebitda margin that ranged between 6% to 8% over the past 5 years.
Prestige Brands Rebuffs Genomma Offer
Prestige Brands (PBH), a US healthcare and cleaning brands company, has rejected an unsolicited bid by Mexico’s Genomma Lab, which last month offered $834m for the company, it says. The PBH board voted to reject Genomma’s $16.60 per share offer, calling the 23% premium “well below comparable transactions.” The board also noted that the implied Ebitda multiple of the offer undervalued PBH at a time when it is still in the process of absorbing previous acquisitions. A spokeswoman at PBH said the offer as directed to the board was not viable, and said that Genomma has not made a tender offer for the shares. Genomma officials did not return calls for comment. The Genomma offer represents an implied 9.5x Ebitda multiple in a best case scenario, according to Janney Capital Markets, which also says the offer likely “undervalues Prestige’s shares.” Despite the rejection, however, the board appeared open to a sweetened offer. “We would be open to compelling, fully financed offers that provide certainty of closing. Should Genomma Lab make such an offer, there would be a basis to engage with them,” PBH says. In late February, Genomma sent a letter to the PBH board suggesting a hostile takeover could ensue should the board reject its bid for the company. Following the offer, PBH adopted a shareholder rights plan, better known as a ‘poison pill’, in an attempt to preempt Genomma’s purchase of shares. PBH owns a number of brands, including Spic And Span, Comet and Dramamine.
Vitro Secures Legal Protection to US Assets
Troubled Mexican glassmaker Vitro obtained a temporary restraining order from the US Bankruptcy court in Dallas that will help the company protect its assets from creditors as it proceeds with the restructuring of $3.6bn in debt, including $1.9bn in intercompany obligations. The court’s move is a step before it decides whether to give a nod to Vitro’s motion of enforcing its debt restructuring plan in the US, Vitro says. The court’s decision can block Vitro boldholder funds from attempting to seize accounts receivable Vitro collects from US customers. The Mexican company finalized its debt restructuring plan in late February, despite staunch opposition from bond holders. The company pushed forward the unpopular deal by counting internal company debt owed to its own subsidiaries to gain a majority vote it its own debt restructuring. Debt holders have attempted several legal challenges to Vitro’s debt restructuring, but the company has a so far gained approval for the plan from the Mexican legal system. 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.
JBS Ups Stake in Pilgrim’s Pride
Brazilian meatpacker JBS has paid $143.3m to increase its stake in US chicken producer Pilgrim’s Pride to 68%, through the most recent company share offering. Pilgrim’s sold 44.4m new shares at $4.50 per share to revamp its capital structure, and through that offer, JBS spent $134m to maintain its original 67.2% stake, a Pilgrim’s spokeswoman confirms. JBS spent an additional $9.3m to raise its stake to 68%, based on company data. The Pilgrim’s spokeswoman declined to offer additional details and JBS officials could not immediately be reached for comment. Pilgrim’s managed to secure $200m from the sale of the new shares. JBS first acquired a stake in Pilgrim’s in 2009 with the financial backing of Brazil’s BNDES development bank.
CME, Bovespa Strike Cross-Listing Deal
The Chicago Mercantile Exchange Group (CME) has struck a deal with Brazil’s BM&FBovespa (BVMF) for the cross listing and licensing of traded index- and commodities-based futures, it says. Under the deal, the CME will list dollar-denominated futures of the Bovespa, while the BVMF will offer dollar-denominated S&P 500 index futures settled in BRL. The Brazilian market will also list the Chicago Board of Trade’s Mini-sized Soybean futures and the New York Mercantile Exchange’s Light Sweet Crude Oil (WTI) futures in the second and third quarters of this year, respectively. Officials at the CME were not immediately available for comment. A BVMF investor relations officer says the deal involves an agreement to share the revenue generated by the trading of these securities, in which the owner of the security will take the larger share of the revenues. He declined to offer details of the deals, however. The BVMF official said the market will also pay a license for the use of the S&P 500 product and for the market data generated by the trading of the futures contract at the CME.
US E&P Co Plans Venezuela Divest
Harvest Natural Resources (HNR), a Houston-based independent oil company, is aiming to sell off its 34% stake in the Petrodelta oil project in Venezuela. The company has already started talks with a potential “third party” to sell off its share in the venture in which it is partnered with state-owned Petroleos de Venezuela, PdVSA, the company says. A spokeswoman for Harvest declined to offer additional details of the ongoing process. Officials at PdVSA could not immediately be reached for comment. HNR has said that it began negotiations for the assets on March 5, but noted that there is no guarantee the talks will result in a final sale. As of end 2011, the Petrodelta venture controls roughly 194m barrels of oil in 3P reserves, a combination of proved, probable and possible reserves held underground, a 1% decline from 2010, following HNR’s reserve review.
Prestige Brands Takes Poison Pill in Genomma Lab Offer
Prestige Brands Holdings (PBH), a US healthcare and house cleaning products company, has moved to adopt a shareholder rights plan, following last week’s hostile takeover bid by Mexican pharmaceutical marketer Genomma Lab. The PBH board adopted the plan, a strategy better known as a “poison pill,” after Genomma offered to acquire the company’s outstanding shares at $16.60 per share. The aim is to “allow the board of directors adequate time and opportunity to explore, develop and consider any and all alternatives,” the company adds. A poison pill typically dilutes a buyer obtaining a certain percentage of a company, a move that prevents the acquirer from sidestepping a negotiation with a target’s board and dealing directly with shareholders. PBH has not made public the details of its shareholder agreement, but says it will expire after the 2013 annual meeting. Officials at Prestige Brands could not immediately offer additional details. Genomma Lab could not be reached for comment. Last week, Genomma unveiled an offer to shareholders of $834m for the company’s equity, as well as assuming $891m in debt. Overall, the deal implied 9.5x Ebitda, according to calculations by Janney Capital Markets, which deemed the transaction “dubious.”
Mexico’s Genomma Faces Heat in US Bid
A poor market reaction and a possible legal challenge confronted Mexican pharmaceutical marketer Genomma Lab following a bid to acquire Prestige Brands Holdings (PBH), a healthcare and house cleaning products company in the US. Genomma’s shares lost 9.41% Tuesday, following the announcement of an offer to pay $16.60 per common share, or $834m, for PBH. The acquisition would also mean assuming the company’s outstanding debt of $891m, according to Janney Capital Markets. Genomma made the offer to PBH’s board and also revealed the details publicly to Prestige shareholders, a move that has cast doubt on the amicable terms of the deal. Others question its thinking. “It doesn’t make sense. Their strategy is Mexico and Latin America. It’s difficult to see what they would bring to the table here,” says an equity analyst who covers Genomma. He notes that its US operations involve marketing its existing products to Hispanics, but managing Prestige’s brands would involve new products in a broader market with different characteristics. The offer represents a 23% premium over PBH’s closing price on Friday and is 47% higher than the average for the past three months, it says. “Our strong preference is to work with you to negotiate a mutually acceptable transaction and avoid unnecessary costs,” Genomma’s chief, Rodrigo Herrera Aspra, says in the note to PBH shareholders. Herrera adds that Genomma has already received “indications of interest” from banks willing to finance the acquisition. It expects the transaction could close in three weeks if both parties move quickly and willingly. However, Janney Capital Markets calls the transaction “dubious,” and estimates there is only a 50% chance the deal may actually go through, it says in a report. The offer represents an implied 9.5x Ebitda in the best case scenario, it notes. The transaction is also facing a potential class action litigation from apparently dissatisfied PBH shareholders. Law firm Faruqi & Faruqi, which claims to repre
Elektra Enters US with Payday Loan Buy
Mexico’s Elektra has agreed to buy US payday loan company Advance America in a deal valued at $780m including assumed debt. The purchase marks the Grupo Salinas company’s first step into the financial sector in the US, home to a large Mexican community that sends remittances home to low-income households, which also make up the base of Elektra’s customers. Elektra has offered to pay $10.50 per each Advance America share, or $655.6m, a 33% premium over the $7.91 close the day before the announcement. The purchase is being financed using roughly $300m of Elektra’s own cash and $450m from dollar and peso-denominated debt, a spokesman adds. The company raised $150m in a reopening of its 2018 bonds at the end of January, and he says it plans to issue an additional $300m soon. The $780m price tag for Advance America represents an enterprise value to Ebitda multiple of 6.5x, taking the company’s only available Ebitda up to September 2011 of $120m. “Elektra is paying 1.2x the sales of its new subsidiary, a level that appears adequate considering its operations, the potential for synergies, and the strategic position that Elektra now has in the US,” Gaspar Quijano, an analyst at Vector Casa de Bolsa, tells LatinFinance. He describes the move as “surprising but positive.” The deal should not immediately affect Elektra’s ratings says Fitch, which currently rates the Mexican company’s debt at BB minus. That said, Fitch reckons Elektra’s debt leverage would briefly rise to 2.7x before settling back to 2.5x in the short term. Elektra retained Stephens as a financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison as legal counsel in the deal. Wells Fargo Securities and K&L Gates, served as financial and legal advisors to Advance America. Advance America operates 2,248 centers in the US, as well as limited operations in Canada and the UK.