Chilean airline LAN will today auction 21.8m shares, or a 6.4% stake, on the local exchange for a minimum price of CLP9099.58 per share, according to a regulatory filing. Based on the minimum price, the total sale could be worth $367.7m. The shares belong to Axxion and Inversiones Santa Cecilia, investment vehicles controlled by Chile’s president elect Sebastian Pinera. Chilean brokerage Celfin Capital is managing the auction. Costa Verde Aeronautica, the investment vehicle controlled by the Cueto family, acquired an 8.6% share in the airline from Pinera’s vehicles on February 23. It already held a 25% stake in the airline. After the 6.4% stake is auctioned, there will be an 11% stake remaining in the investment vehicle’s hands. One potential buyer is said to be Brazil’s TAM airlines. Brian Moretti, equities analyst at Planner Corretora in Sao Paulo, writes in a research note that TAM has around $725m in cash, enough to acquire the remaining stake, which, if sold at CLP9,099.58 per share, could be worth about $575m. Pinera had promised during his campaign that he would divest his 26% stake in the airline held by Axxion and Inversiones Santa Cecilia by March 11, when he is slated to take the presidency.
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GVT Hits up Parent for Cheap Loan
Brazilian telecom GVT, which was acquired by Vivendi between November and January, says it has received an intercompany credit facility worth up to EUR250m with draw-down maturities of 5-years. The facility pays a meager Euribor plus 35bp, according to GVT, which also notes the benchmark rate stands at 0.92% a year as of February 23. Proceeds are being used to finance GVT’s expansion plan in Brazil and round out its balance sheet. GVT was the subject of a bidding war between Telefonica’s Telesp and Vivendi. The French media company won the target by securing a majority stake through a private negotiation while Telesp’s tender offer for the shares was still outstanding. The original stake purchase by Vivendi valued GVT at BRL7.17bn.
Davivienda Places Sub Notes
Colombian financial institution has sold COP250bn in local subordinated bonds in 2 tranches. A COP112bn 7-year piece pays IPC plus 5.25% and a COP138bn 10-year piece pays UVR plus 5.50%, says John Fredy Linares, head of financial management at the institution. He adds that total demand reached COP400bn. Proceeds of the issue, which Davivienda is managing, will be used for working capital.
Brazil Unwinds Stimulus, Readies Hikes
Brazil’s central bank has reverted to some of its pre-crisis bank reserve requirement rules in a broader move to unwind stimulus measures adopted immediately after the beginning of the financial crisis in 2008. The move should drain an estimated BRL71bn of liquidity out of the banking system, according to the central bank. “Despite the large amount, we do not see [these measures] as a replacement for higher interest rates,” says Alexandre Schwartsman, head of Brazil macro research at Santander in a report. “Instead, we believe they represent simply a gradual return to normalcy as the effects of the financial crisis are being overcome.” Goldman Sachs also sees the moves as positive and predicts the bank will begin a 375bp tightening cycle in March, ending in October. Yesterday’s measures by the central bank, which will take effect in March and April, depending on the measure, include upping the deposit requirement to 15.0% from 13.5%; moving the exemption limit back to BRL500,000, from BRL10,000; increasing deductions for small an medium-sized institutions; and reducing portfolio acquisition-related deductions to 45%, from 100%.
Cofide Bond Expected
Cofide, Peru’s private-public development bank, has received a second investment grade rating, receiving a BBB minus score from Fitch. In early February, the bank received a BBB minus from S&P. Now that it is equipped with 2 high grade ratings, Cofide is likely planning to issue a bond, speculate DCM bankers familiar with the credit. The state-owned issuer hasn’t issued dollar notes in the past, according to Dealogic. Ratings reports do not detail plans for issuance. Furthermore, bankers say no RFP has been sent out. But Cofide does have outstanding a $185m 3-year step-up loan, raised in June 2008 and it may look to take advantage of favorable bond issuance conditions to refinance the facility. At launch, the loan was scheduled to pay 150.0bp in year 1, 162.5bp in year 2 and 175.0bp in year 3. Standard Chartered and Barclays led that deal, which was upsized from $150m.
Jamaica Debt Exchange Reaches 99%
Investor participation in Jamaica’s JAD700bn ($7.7bn) debt exchange (JDX) has reached 99.2% on February 24, the settlement date for the transaction, says Peter Moses, Jamaica country officer at Citi, which is managing the process. He adds that 100% of the institutional investors involved, including local pension plans, insurance companies, banks and large corporations, participated. “One of the most pleasing aspects of the exchange is that the high-level participation speaks of the lack of capital flight,” Moses tells LatinFinance, adding that there is still a process in place to get the remaining 0.8% of investors, mostly individual investors, on board. He claims the JDX will allow average interest rates on Jamaica’s debt to drop to between 11%-13% from an average of 19%, creating savings of JAD42bn. Citi declines to specify how or if the sovereign’s average debt maturity has improved as a result of the exchange.
Femsa Weighs M&A, Bond Buyback
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.
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.