Posadas Shifts Focus to Ride Mexican Growth (1)

As part of a continuing strategy to strengthen its balance sheet and refocus on Mexico, Grupo Posadas has sold its South American hotels to France’s Accor for $275m, it says. The deal also reflects a renewed focus on Mexico’s domestic market at a time when economists are forecasting better numbers for growth in the country and in the tourism sector. “We have completed a very satisfactory transaction that will allow us to reduce our debt levels and look forward to further growth and strengthening our leadership position in Mexico,” Ruben Camiro, Posadas’ CFO, tells LatinFinance. Funds from the sale are going to be used to pay down debt and contribute to the company’s domestic growth. Posadas’ growth is likely to be organic, he says, with no plans for acquisitions in Mexico. The deleveraging process has been a long one for Posadas, which was caught on the wrong side of currency swaps during the crisis and has struggled with liquidity since. It raised MXP900m ($71m) through the sale of convertible 9.0% 2014 domestic bonds to existing shareholders in March, bringing leverage to near 6.0x from 6.8x at year-end 2011, according to Fitch, which rates Posadas B minus. Camiro says the company could look at the bond market next year, depending on maturities available and market conditions. The company has $165m-equivalent in local bonds due in April 2013. Monday’s sale proceeds will also go towards that, and the company could use the bond market to improve its maturity profile. In forecasting better GDP growth numbers in the next 5 years for Mexico, economists point to tourism as one of the many sectors that would revive with a continued recovery in the US. In fact, a recovery strong enough to draw visitors outside the US, but not strong enough to send travelers further than next door to Mexico, would suit the industry quite well. “Mexican tourism has been picking up quite interestingly this year,” Camiro says, noting growth in Mexico not seen since the crisis. A bette