Telemar Dials up BRL War Chest

Brazil’s Telemar is summoning relationship banks to put together a BRL16bn acquisition facility. The company, whose subsidiary Oi is making progress with discussions for the acquisition of Brasil Telecom, is heard to have narrowed a short list of potential bookrunners down to eight. And it is seeking to denominate as much as possible in local currency, which one banker believes could account for well over half the total. Such a large BRL facility will test the depth of the local loan market and foreign banks’ willingness to take FX risk. A banker close to the process estimates the financing commitment will be for the full BRL16bn, but that the actual facility may vary in size depending on the availability of other markets such as local debentures and cross border bonds. Tenors and pricing are still being decided. Known relationship banks for Telemar include Santander, ABN AMRO, Citi, Calyon, Societe Generale and JPMorgan as well as locals Banco do Brasil, Itau, and Bradesco. Legal shareholder disputes between investors in the companies, including Citi and Rio-based asset manager Opportunity, have delayed the acquisition process.