Camargo Syndicates BRL Jumbo

Brazilian cement producer Camargo Correa is hitting up lenders for a new up to BRL3bn 3-year M&A loan in the Brazilian bank market. The funds are being used to help finance Camargo’s acquisition of a 28.6% stake in Cimpor, secured over the past several weeks. The privately-held group is an infrequent user of the funding markets and has no outstanding publicly traded debt or equity instruments, according to Dealogic, so a new facility is being received with interest. The syndicated loan is also notable because it is being done in local currency through HSBC’s Brazil unit, which has not been among the biggest local currency lenders, say executives close to the shop. HSBC has provided an underwriting in BRL and is inviting participants with a mind to seal the distribution by early March. The facility’s structure involves 2 consecutive 6-month promissory notes (PN) worth up to BRL3bn each. At the maturity of the second PN, the instrument is converted into a BRL3bn 2-year debenture, according to an executive eyeing the process. Pricing for all 3 portions is heard at 110% of the CDI, which is equivalent to around CDI plus 100bp assuming an annualized CDI rate of 9.9%. The rate is seen by local and foreign bankers as low, considering tenor and credit risk. A larger facility from local banks to back CSN’s failed bid for a Cimpor stake is heard to have gone for a higher spread. Consolidated leverage figures for Camargo are cited at around only 1.5x, says one noticeably, though Fitch says pro-forma net leverage will rise to 3.5x from 2.7x with the acquisition. Camargo has accumulated a 28.6% stake in Cimpor by acquiring stakes from Teixeira Duarte and Bipadosa for EUR6.50 a share, valuing its position in the Portuguese company at EUR1.25bn, or BRL3.1bn. While the stake purchase is being made in EUR, most of Camargo’s revenues are in BRL, which is why the company has chosen to do a local currency loan, say bankers. The company will have to swap the BRL debt into EUR once the f