Femsa is weighing its spending options as it is poised receive some $700m in cash from Heineken, according to Gerardo Estrada, corporate finance director at Femsa. The cash payout is part of a $7.6bn deal announced last month whereby Femsa is swapping its beer unit for a 20% stake in the European brewer. Heineken agreed to assume $2.1bn in debt issued by Femsa Cereveza and is transferring Femsa the $700m so it can have the option to repurchase some MXP7.5bn in certificados bursatiles that had been passed down to the Cerveza unit from the parent company. But the executive says Femsa may elect to spend the money in other ways, including M&A. “We will have more cash [on hand] than debt, and we will have to decide what to do with the proceeds we are receiving,” Estrada tells LatinFinance. “Absent any alternative to invest it, we will consider a public offer to repurchase the Mexican bonds issued by the holding company.” As Femsa is a growth-oriented company, he explains, the preference is to use cash to make acquisitions as it focuses on expanding its Oxxo convenience store brand, and Coca-Cola Femsa, the bottler of which it owns 53.7%, he explains. In the absence of opportunities to expand in businesses complimentary to those areas, it will opt for the repurchase. Femsa canceled a new domestic bond it was roadshowing late last year when it became clear a deal with Heineken was likely. Estrada says the company will likely require less debt financing in the future than it did before the sale of Femsa Cerveza.
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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
SiLAS: Securitization and Structured Finance in Latin America
The securitization and structured finance market in Latin America has shown remarkable resilience during the financial crisis. Economic crises are not new to the region, meaning business professionals and politicians alike have handled this rockier time for the entire globe with a long-term view and level headedness that has made the region, now post-crisis, more appealing than ever.
Curtis Adds LatAm-Focused Partner
New York-based law firm Curtis, Mallet-Prevost, Colt & Mosle has appointed Robert H. George as a partner to be based in the firm’s Houston office. He will focus on the LatAm, infrastructure development and energy, finance and derivatives practice groups. George joins Curtis from King & Spalding, where he led the LatAm practice from Sao Paulo. Curtis has offices in the US, Mexico, Europe, Europe, the Middle East and Asia.
Colombia, Argentina, Jamaica Get WB Funds
The World Bank has approved a $500m loan to Colombia so the country can consolidate its social protection system and mitigate the impact of the global financial crisis. The 27-year loan has a grace period of 8 years and a variable interest rate based on Libor. The bank also approved a $229m loan to Argentina to help it monitor, prevent, and control the A/H1N1 influenza pandemic, as well as other preventable diseases. This is a fixed-spread emergency loan with a 30-year maturity and a grace period of 5 years. Lastly, it also approved a $200m loan for Jamaica to support the government’s comprehensive reform program to address fiscal and debt sustainability. The loan has a 30-year term, a 5.5-year grace period and a variable interest rate.
Cielo Launches ADR Via Deutsche
Brazilian payments processing network Cielo, formerly VisaNet, has tapped Deutsche to be the depository institution for its new Level 1 ADR listing, which will trade on the OTC in the US. Deutsche won the mandate despite not having any role in the company’s
June 2009 IPO, which was led by Bradesco BBI, Banco do Brasil, Santander, JPMorgan, BTG Pactual and Goldman Sachs. Ricardo Chicizola, a London-based director at Deutsche’s depository receipts group, says his firm has in the past 12 months won 7 ADR appointments, 3 of which, including Cielo, MRV and CPFL, have been launched.
Chavez Wants Power Fund
The Venezuelan government says it will create a $1bn fund to finance power projects in the country. The National Electricity Fund will be managed by the electric power ministry, which has unveiled plans to increase capacity by almost 15,000MW by 2015 with the construction or modernization of 24 thermoelectric and hydroelectric plants. The government claims the country’s electricity infrastructure has been suffering due to droughts caused by El Nino, though a lack of investment and maintenance is also a likely cause. The government does not specify how it will raise the funds.
PDVSA Seen Tapping in H2
Despite claims from the Venezuelan government that PDVSA will not issue new debt in the bond market this year, Barclays analysts believe the state-owned oil giant is a likely candidate for issuance later in the year. “In our meetings, the [central bank,] the ministry of finance, and PDVSA assured us that there will be no issuance in 2010. However, we are not so optimistic and believe only that this will not happen in the coming months,” says the shop, who believes combined sovereign and PDVSA debt issuance this year should not top $6bn. “Our baseline scenario continues to be $3bn in new issuance from PDVSA, with maturities in 2012 and 2013, and $3bn from the republic, with maturities in 2017 and/or after 2021,” according to Barclays, whose Venezuela analyst has recently toured the country’s institutions. Elsewhere, PDVSA is heard arranging bank meetings in Asia and Europea for its $1.5bn 3-year syndicated loan via BES and China Development Bank. The deal pays Libor plus 450bp.
Peruana Wraps Debut RMBS
Titulizadora Peruana has priced a $32m RMBS, its first ever mortgage-backed security offering, according to an official at the securitization specialist owned by Titularizadora Colombiana. The 20-year bonds backed by mortgages from BCP and Interbank pay 4.8% and saw demand of $34m. The bond is dollar-denominated to match the currency of the loans. In addition to the AAA rated senior pice, a 9.0% subordinated issue raised $2m. BCP’s Credibolsa unit and Inteligo are placement agents for the deal.
Banco de Bogota Sells Bonds
Banco de Bogota has sold COP200bn in subordinated bonds across 4 tranches. A COP45.5bn 7-year piece pays IPC plus 5.33%; a COP49.2bn 7-year piece pays UVR plus 5.29%; a COP50.3bn 10-year piece pays IPC plus 5.45%, and a COP55.1bn 10-year piece pays UVR plus 5.45%, says Juan Carlos Paez, the bank’s treasury manager. He adds that total demand soared to COP306bn. This issue is part of the bank’s plan to issue up to COP1.50trn over a 5-year period to raise working capital. Banco de Bogota managed the sale itself.