Grupo Mexico Considers Funding Options

Grupo Mexico may seek up to $2.4bn or more in funding depending on how various projects evolve in its infrastructure and mining divisions, Daniel Muniz Quintanilla, the company’s CFO, tells LatinFinance. The company is looking to raise $500m in the loan market as it starts building the La Caridad power project in Sonora State, Mexico. The borrower is currently receiving proposals from banks to finance the project, in which Grupo Mexico will act as sponsor and offtaker. This comes as the issuer awaits approval to take control of airport operator Grupo Aeroportuario del Pacifico (GAP), which could require up to $1.5bn in funding depending on how many holders tender their shares. Grupo Mexico currently holds a 25% stake in GAP. Financing could take the form of a loan and takeout, but the company hasn’t made a clear decision yet, adds Muniz. The borrower may also require financing after winning the toll road concession to build and operate the Salamanca-Leon toll road in Mexico. With development bank Banobras offering 30-year funding, the borrower is leaning toward this option, he says. Local financial institutions such as Banorte and Inbursa are also offering financing. About $150m will take the form of equity, with the rest coming from debt. Grupo Mexico could also move ahead shortly with its Tia Maria copper project in Peru now that the government has clarified the new tax regime for mining companies in that country. The greenfield project will require $1bn in investments, with $400m of that amount being financed through equity, he says. On a consolidated basis, the company has about $2.5bn.