Azul.CA.31.05

Daily News

Brazilians Optimistic on Infrastructure Bonds after Tiete Pull

31.05.2012 - Brazilians in the country’s domestic bond market remain optimistic about the prospects for debentures issued under legislation offering buyers tax advantages if the proceeds are used for infrastructure. Toll road operator Rodovias do Tiete has cancelled the sale process for a BRL650m ($327m) 2024 bond, citing market conditions, according to sources following the deal. The inflation-linked bonds were to pay up to 8.75% and be the first to take advantage of legislation eliminating the IOF tax for buyers of bonds whose proceeds were destined for infrastructure projects. The deal had initially been expected to price the week of May 16, and was twice delayed. "The tax benefits [of the class] are very good. There was not total clarity they would be entirely applicable in this case," says a Sao Paulo-based fixed-income investor following the deal. The delays in pricing were partially due to the uncertainty, he says, as to whether the bonds would   fully qualify for the tax benefits, as the proceeds are use used to pay off BRL480m in short-term debt in addition to funding road capex. Spokespeople for the issuer and Barclays – sole lead in its first-ever Brazilian domestic market bond deal – decline to comment. "It has yet to be proven as a real market, but we are betting that that is the future," Joao de Biase, global head of fixed income at Itau, tells LatinFinance,

speaking about the opportunities under the law, known as 12431. As with the rest of the Brazilian local bond market, he says his shop sees tremendous growth prospects ahead, based on an environment of falling interest rates. "The prospects for the asset class are quite stable. Locals will want this type of return," says a Sao Paulo-based DCM banker away from the deal. Bankers say there are other RFPs out there for this type of transaction. One particular aim of the legislation, given the IOF tax break, is increased foreign participation. Rodovias do Tiete was heard to market the deal in the US, UK and Chile, in addition to Brazil. The bonds were rated Aa3 on a national scale.

Banco Pine Talks CHF Guidance

31.05.2012 - Brazil’s Banco Pine is giving guidance of mid-swaps plus 493bp-area guidance for a minimum CHF80m ($83m) 2.5-year bond expected to come by the end of the week, according to investors. Books are expected to close on Friday, with pricing expected on the same day. UBS is sole lead on the transaction, which has a BB rating and would be a debut in Switzerland. In December 2011, the bank closed a $37.5m loan from   Saudi Arabia's Al-Rajhi Bank, claiming to be the first Islamic funding for a Brazilian bank. In April last year, it had plans to issue a $300m 5-year bond in the dollar market but later postponed amid a backdrop of tanking US equity markets and oversupply from Brazilian mid-sized banks. Elsewhere in the cross-border new issuance space, Brasil Foods made no announcements on any new transactions following the completion of    investor meetings Tuesday.

Mabe Reaches 65% in Tender

31.05.2012 - Controladora Mabe has received acceptance from holders of $130m, or 65.22%, of its 2015 bonds in a tender offer, as of May 29, it says. The Mexican white goods manufacturer has also extended the offer’s early payment deadline from May 29 to match the June 11 final deadline. Mabe is offering to exchange the 6.5% 2015 bonds for new reopened 7.875% 2019s. It is offering $1,000 in the new bonds for each $1,000   tendered of the 2015s. Bank of America Merrill Lynch is managing the process. The 2015 bonds were sold in 2005 for $200m. The 2019s to be reopened in the operation were originally sold in 2009, for $350m, through BAML and HSBC.

ICA Expands in Peru

31.05.2012 - Empresas ICA has agreed to acquire a 51% stake in Peru’s San Martin Contratistas Generales, a construction company primarily dedicated to the mining sector, it says. Under the deal, the Mexican builder and engineer will pay $18m up front, and as much as $105m more, based on various performance measures, including San Martin’s 2011-2014 Ebitda. ICA estimated the total would be $80m-$100m. San Martin claims a $440m backlog as of year-end 2011, and booked $240m in revenue last year. The deal    follows ICA’s international strategy of entering into and expanding in country’s via partnerships with experienced locals. Closing is expected by the end of June. BBVA advised ICA.

AMX Launches Dutch Tender

31.05.2012 - As planned, America Movil (AMX) has launched an offer to buy up to 22.9% more of Dutch telecom KPN, it says, and bring its stake as high as 27.7%. The Mexican telecom aiming to expand in European markets while valuations are low is offering KPN holders EUR8.00 per share through June 27 for up to 325m shares, or about $3.25bn total. KPN says it will review the bid, while reiterating the view that the offer is too low.

KPN shares closed Wednesday at EUR7.67. KPN hired Goldman Sachs and JP Morgan to advise it on its alternatives, which analysts say also include selling off assets including its Belgium and German units. The German operations – in a market where indigenous players have little room to increase market share – are said to be of particular interest to AMX. The move is also seen as a way to outpace rival Telefonica in Europe. Analysts have said the Spanish telecom, which competes with AMX on several continents, would be unlikely to match AMX’s offer. AMX has said it has no plans to go after a majority stake. Officials have said they would not increase the offer price if the process fails. Deutsche Bank is advising AMX.

Telefonica Mulls LatAm Listings

31.05.2012 - Telefonica will consider the listing of some of its Latin American businesses, it says, as part of a plan to raise funds that also includes a German listing and disposal of non-core assets. M&A bankers say the ground remains ripe for European companies to sell part or all of LatAm assets as they seek to raise cash, with large Latin American firms, as well as players from Asia, in prime position to scoop them up. Telefonica operates in Argentina, Brazil, Chile, Colombia, Mexico, Peru, Uruguay, Venezuala and Central America.

Toyota Prices MXP Bond

31.05.2012 - Toyota Financial Services Mexico has sold MXP1bn ($71m) in domestic bonds, in a third issuance under a MXP10bn program. The 3-year notes priced at TIIE+33bp. The level sets a new benchmark for peers that have normally paid in the TIIE+50bp range, a banker on the deal says. The deal was heard 3.8x oversubscribed, with mutual funds, retail investors, and Afores heard participating. Proceeds will help refinance MXP1bn due in November 2012. BBVA Bancomer and Banamex managed the transaction, rated AAA on a national scale. In June 2009, Toyota Financial Services sold MXP1bn in 18-month notes at TIIE+180bp.

State Entity Preps Debentures

31.05.2012 - Minas Gerais Participacoes (MGI), a holding company controlled by the state government of Minas Gerais, is preparing to sell BRL400m ($201) in domestic bonds, it says. The 2017 bonds would pay the DI plus up to 3.5%, and can be upsized by 15%. The proceeds will be used to repay the state government under a credit receivables contract. Citi, Santander and ABC Brasil are managing the sale, which has not yet been rated. The regulatory documents do not indicate the timing. MGI is 99% owned by the state, with minority holders including Cemig and the state development bank. The bank is focused on helping companies in the development phase, and its holdings include 16% of the Helibras helicopter manufacturer.

Brazilian Paper Maker Plots Local Debt

31.05.2012 - Santher, a Brazilian paper manufacturer, plans to sell BRL230m ($115m) in Brazil's local debenture market, it says. The 2016 bonds are to pay the DI plus 1.6%, and amortize in 5 equal parts beginning 2014. Santher will repay existing debt with the proceeds. It does not name the banks on the deal, saying only it has been authorized to hire banks, and a spokesperson declines to comment.

Bancolombia Eyes Domestic Issuance

31.05.2012 - Bancolombia’s board of directors has approved an up to COP3trn ($1.6bn) domestic bond issuance, and the Colombian bank could look to issue in the second half of this year, according to a person familiar with its plans. Further terms have yet to be determined, though funds could be used generally for loan growth and portfolio needs. Bancolombia’s investment banking arm would manage the issuance.

Lender Registers COP Bonds

31.05.2012 - Bancamia has registered a domestic bond issue of up to COP400bn ($220m), it says. The Colombian microlender can choose from 5 series, which are expected to have maturities between 1 and 5 years, and pay interest at fixed rates or rates set to the country’s various benchmarks. Bancoldex is partially guaranteeing the bonds. The issue will be led by Corficolombiana.

Carvajal Wraps up Packaging IPO

31.05.2012 - Colombia’s Carvajal Empaques has raised COP195.8bn ($104m) from its IPO, it says, allocating 36.9m shares at COP3,500 each. The unit of the Carvajal conglomerate picked a tricky time for the sale, given the volatility in global equity markets, and the total fell short of a COP212bn target. The IFC has bought COP27.22bn. About 56.4% went to Colombian institutions, the company says, with 29.6% to Colombian retail investors and 13.93% to foreigners. Corredores Asociados managed.

Brazilian Cookie Maker adds Peer

31.05.2012 - Brazilian food products company M. Dias Branco has agreed to buy Moinho Santa Lucia, it says, for up to BRL90m ($45m). It will pay BRL45m up front, followed by BRL27m over the next 6 years, and BRL18m at the end of the 6-year period. The transaction is subject to shareholder approval. M. Dias did not use an outside advisor, a company official says. Santa Lucia, a cookie and wheat products specialist, is based in the Northeastern state of Ceara.

Embraer Names New CFO

31.05.2012 - Embraer has named JoseAntonio Filippo as CFO, it says, effective Monday. He replaces Paulo Penido Pinto Marques, who left last month to join the board of former employer Usiminas. CEO Frederico Pinheiro Fleury Curado had been performing the CFO duties at the Brazilian aircraft manufacturer in the interim. Filippo was previously CFO at retailer Companhia Brasileira de Distribuicao.

Brazil Continues Rate Cuts

31.05.2012 - Brazil cut its policy rate by 50bp as expected, bringing the Selic to 8.50%. Goldman Sachs, ahead of the cut, gave rationale for its expected drop. The cut would take into account recent deterioration of the global macro-financial backdrop, weaker than expected domestic real activity, the fact that the services inflation curve is finally turning down, and the recent modification of the mechanism setting the remuneration of savings accounts, Goldman Sachs said in forecasting the cut. "We believe the Selic rate will reach 7.75% in this easing cycle, after a final 25-bp cut in August," Itau says, also having called for a 50bp cut.

Internationals Continue Targeting M&A

29.05.2012 - A recent wave of M&A Transactions, most recently Diageo's purchase of Brazil's Ypioca, has seen international players look to capitalize on LatAm's, and specifically Brazil's, growth story. Continued international strategic investment, also highlighted last week by GE buying a slice of EBX and General Mills taking Yoki Alimentos, should be a theme in the remainder of the year, as should continued European divestment, bankers say. There has been $64.93bn in M&A volume done this year through May 25 from 764deals, according to Dealogic compared to $64.83bn from 672 transactions in the corresponding period in 2011. “The increase in volume is mainly a result of deals getting moved to this year from last year,” says a senior new York-based LatAm investment banker. He adds that certain large deals have moved the needle this year – the 5.63bn Abu Dhabi investment in EBX and Itau’s move for the rest of Redecard come to mind– but might not be indicative of a true uptick in volume. Still, strategic interest may well push volume higher. International spirits company Diageo agreed to purchase Brazil's Ypioca Agroindustrial Limitada, it says, for BRL900m ($454m). The move adds the cachaca producer with 8% market share to Diageo's assets in Brazil, which include the Nega Fulo cachaca and distribution of its well-known global brands including Johnnie Walker, Guinness and Smirnoff. The transaction is expected to be earnings per share neutral in year 1, and profit positive in year 5. Morgan Stanley advised Diageo, which is also negotiating to acquire Mexico's Jose Cuervo. In another deal, Japan's Takeda Pharmaceutical agreed to buy Brazil’s Multilab Industria e Comercio de Productos Farmaceuticos for BRL500m cash, the companies say. The move gives
one of Aisa’s largest drugmakers a sales network in the country where it already has a commercial subsidiary. Multilab’s owners, Genesio Cervo and Rejane Gobbi, will get as much as BRL40m in additional milestone payments at a later date. Takeda was advised by JPMorgan and Multilab by BTG Pactual. In an international exit, Spanish infrastructure group ACS revealed Monday that it sold 7 transmission lines in Brazil for EUR423m ($529m), plus the taking on of EUR328m in debt. ACS does not disclose the buyer. As strong as international interest remains in the region, there are still many Europeans who need to sell, bankers say, with other global payers and cash-stuffed Latin Americans the likely buyers. “People are a little more cautious with the European volatility, though this has caused some Europeans to sell assets, and we could certainly see many more divestitures. We haven’t even scratched the surface [of possible divestitures]” says another New York M&A banker. He notes Telefonica as one of the larger players in a tight spot. “We will see more divestitures. The key question is does the stream of buyers from Aisa slow along with the global slowdown. I don’t think the trend will stop, but it does feel like some of the demand has topped out,” he says.

Vale Unloads Colombian Coal

29.05.2012 - Vale has agreed to sell its Colombian coal operations to Colombian Natural Resources (CNR) for $407m, it says. The assets include the El Hatillo coal mine and the Cerro Largo coal deposit, as well as an 8.43% equity stake in the Fenoco railroad consortium, and 100% of the Rio Cordoba port concession. CNR will pay cash, and the deal is subject to regulatory approval. Vale had bought the assets from Cementos Argos in 2009 for $306m.

 

Ultrapar Adds Terminal

29.05.2012 - Brazilian fuel distributor Ultrapar has agreed to acquire the Temmar port terminal from Noble Group, it says, for BRL160m ($80m). Under the terms of the sale, done through the Ultracargo unit, Ultrapar could pay an additional BRL12m-BRL30m, as a result of future storage capacity expansions in the next 7 years. The deal is subject to shareholder and regulatory approval. Temmar is located at the Itaqui port in the state of Maranhao. Over the last four years Ultracargo has acquired the Uniao Terminais at the port of Santos, and another terminal at Suape in the state of Pernambuco.

 

Vinci Offers Boost to PDG

29.05.2012 - Brazilian private equity firm Vinci Partners has offered to raise up to BRL800m ($404m) for PDG Realty, PDG says, to help shore up the homebuilder's balance sheet as it faces cost overruns, project delays and increasing debt levels. Under the proposal, Vinci would raise BRL800m through the sale of warrants entitling each holder to one new share and one convertible debenture, at BRL4.02 each. This represents an 11.4% premium to Friday's closing share price, Vinci says. The shares closed at BRL3.78 Monday. The debentures acquired under the plan could be converted after 4 years into one additional new share at a minimum of BRL6.00 per share. Vinci would contribute between 54.8% and 81.4% of the fresh capital under the plan and refrain from trading the new shares it acquired for 2 years. The firm says the preemptive rights of existing shareholders to subscribe to the transaction would be respected. PDG's net debt was BRL5.1bn atthe end of March, versus BRL3.2bn a year earlier.

 

Colombia Holds Rates

29.05.2012 - Colombia’s Central Bank has elected to keep the benchmark interest rate at 5.25%, in line with the market’s expectations. It notes domestic inflation levels slightly less than expected, as wells as an increasing probability of a European recession among the factors in its decision.

 

Cencosud Files ADS Sale

29.05.2012 - Chile's Cencosud plans to sell up to $718m in ADS in an equity follow-on, according to a regulatory filing. It does not give the timing of the sale, representing 132m common shares, to be led by Credit Suise, JPMorgan, Morgan Stanley, UBS, Santander and BBVA. The supermarket operator is raising funds to pay down debt, and fund the acquisition of Jumbo Retail Argentina, in addition to general corporate purposes.
Each ADS would be worth 3 common shares, and initially referenced by ADRs. The move comes under a a $2bn total capital increase approved last year. Cencosud has operations in Chile, Colombia, Peru, Argentina and Brazil. Its common shares closed at CLP2799 ($5.49) Monday.

 

Pague Menos Readies IPO

29.05.2012 - Brazilian pharmacy chain Pague Menos has registered for an IPO, it says. It does not give the timing or size of the transaction, to be lead by Banco do Brasil, Credit Suisse, Itau and Santander. The sale includes both primary shares and secondary shares to be sold by members of the founding de Queiros family, and is expected to raise as much as BRL500m ($253m). The drugstore plans to spend 90% of the proceeds on opening new stores, and 10% to build distribution centers. The retailer founded in 1981 posted BRL232.2m in Ebitda in 2011, up from BRL144.5m in 2010. The company is also undergoing a BRL260m ($130m) local bond sale. A planned 2016 debenture pays the DI plus 1.19%. Proceeds are marked for working capital and improving the issuer’s debt profile. Banco do Brasil is managing the sale, done under the rule 476 restricted format.

 

Banco Pine Plans CHF Bonds

29.05.2012 - Brazils’ Banco Pine plans to sell CHF100m ($104m) in bonds in the Swiss market, according to Fitch, who assigns a BB rating. The 2.5-year bond would be the issuer’s first in Switzerland, according to Dealogic data. A bank spokesperson declines to comment on the sale. LatAm issuance in Europe has slowed thanks to the increasing worry about the Eurozone’s future. The last CHF issuer from LatAm was Santander Brasil, with a CHF150m sale in March.
 

Barclays Credit Analyst Leaves

29.05.2012 - Juan Cruz has left Barclays Capital, where he was an EM corporate credit analyst, according to a person familiar with the matter. A spokesman at the bank declines to comment.

BB Plans RE Credit Fund

29.05.2012 - Banco do Brasil has filed to raise a BRL400m ($202m) Fundo de Investimento Imobiliario (FII) real estate fund in Brazil’s domestic market, according to the CVM. The 10-year vehicle will purchase real estate credit instruments, such as certificados de recebiveis imobiliarios (CRI), Letras de Credito Imobilario (LCI) and Letras Hipotecarias (LH). Investors will receive a spread to the DI rate, to be determined during the bookbuilding period, from June 6 to June 26, according to the documents. The fund can be upsized to BRL480m. Banco do Brasil is managing the sale. Also last week, Credit Suisse Hedging Griffo filed for the BRL82.4m second sale of shares in a FII investing in shopping malls. The deal adds to a BRL100m fund.
 

Codelco CEO Steps Down

29.05.2012 - Diego Hernandez has resigned as CEO of Codelco, the Chilean miner says, effective June 1. Thomas Keller has been named as his replacement. Hernandez steps down for personal reasons. Keller, who currently serves as vice president of administration and finance, has been with Codelco since 2010 and has also held positions at Grupo Shell in Chile.
 

 

PDG Realty: Vinci Partners proposes USD 401.5m investment by issuance of warrants and debentures 

29.05.2012 - Brazilian listed homebuilder PDG Realty Empreendimentos e Participacoes (PDGR3: BZ) has announced that its Chief Executive Officer received from Vinci Partners Investimentos a corporate transaction proposal. The Proposal requires the submission for approval, by PDG’s general meeting of shareholders, a transaction with the following main aspects:

1) Contribution of BRL 799,980,000.00 (USD 401.5m) in the Company by issuing 199,000,000 onerous and private warrants, giving each of them the right of the holder thereof to subscribe (a) one (1) new share, to be issued privately in a capital increase transaction to be implemented immediately after the acquisition of the Warrants, and (b) one (1) convertible debenture, convertible into one (1) share of the Company. Both the Warrants and Debentures will be admitted to trading on organized markets.

2) The total amount of the contribution is equivalent, on a consolidated basis, to BRL 4.02 (USD 2.01777) per share, of which BRL 4.01 (USD 2.01275) are for capital and capital reserves (being BRL 4.00 resulting from the acquisition of Warrants and BRL 0.01 arising from the subscription of each new share), and the remaining balance of BRL 0.01 as debt, related to each Debenture. The price per share of the capitalization, of BRL 4.01, is based on the weighted average price per share by the volume traded in the last 20 trading days, with a premium of 11.4% when compared to the closing trading price of 25 May 2012.

3) Each Debenture would be convertible, at the end of the period of 4 years from the date of issuance, in one new additional share to be issued by the Company, against the additional payment by the Debenture holder, on the date of conversion, of the higher amount, for each Debenture, of the following: (a) BRL 4.00 (USD 2.00773), adjusted by the variation of the Selic rate in the period between the date of issuance of the Debentures and the issuance and payment of the new shares, or (b) BRL 6.00 (USD 3.01159).

Mexichem Names CEO

29.05.2012 - Mexichem has named Antonio Carrillo as CEO, effective June 1. He will report to Ricardo Gutierrez, executive committee president. He has previously worked at Grupo Infra, and also at Trinity Industries, as vice president of operations. He replaces Rafael Davolos, who moves into a more strategic role at the company, expanding internationally. Mexichem is in the process of taking full control of Dutch pipe maker Wavin.

Debt Funds Lose Cash

29.05.2012 - EM debt funds booked net outflows of $478m during the week ended May 23, according to EPFR. In terms of performance, the class fell 0.81% during the week ended May 24, bringing it to a 3.63% gain year-todate, according to Lipper. Global income funds lost 0.42% for the week, and are up 2.08% ytd. International income funds fell 0.48% during the week, for a 0.97% gain ytd.

Equity Funds Continue Net Outflows

29.05.2012 - EM and LatAm equity funds saw net outflows of $1.54bn and $527m, respectively, during the week ended May 23, according to EPFR. In terms of performance, LatAm funds lost 1.06% during the week ended May 24, and are down 4.06% year-to-date, according to Lipper. EM funds fell 0.94% during the week, to pare their ytd gain to just 0.32%. Global small and mid-cap funds, by comparison, gained 0.36% on the week, and have earned 4.38% ytd.
 

PDG Realty: Vinci Partners proposes USD 401.5m investment by issuance of warrants and debentures 

29.05.2012 - Brazilian listed homebuilder PDG Realty Empreendimentos e Participacoes (PDGR3: BZ) has announced that its Chief Executive Officer received from Vinci Partners Investimentos a corporate transaction proposal. The Proposal requires the submission for approval, by PDG’s general meeting of shareholders, a transaction with the following main aspects:

1) Contribution of BRL 799,980,000.00 (USD 401.5m) in the Company by issuing 199,000,000 onerous and private warrants, giving each of them the right of the holder thereof to subscribe (a) one (1) new share, to be issued privately in a capital increase transaction to be implemented immediately after the acquisition of the Warrants, and (b) one (1) convertible debenture, convertible into one (1) share of the Company. Both the Warrants and Debentures will be admitted to trading on organized markets.

2) The total amount of the contribution is equivalent, on a consolidated basis, to BRL 4.02 (USD 2.01777) per share, of which BRL 4.01 (USD 2.01275) are for capital and capital reserves (being BRL 4.00 resulting from the acquisition of Warrants and BRL 0.01 arising from the subscription of each new share), and the remaining balance of BRL 0.01 as debt, related to each Debenture. The price per share of the capitalization, of BRL 4.01, is based on the weighted average price per share by the volume traded in the last 20 trading days, with a premium of 11.4% when compared to the closing trading price of 25 May 2012.

3) Each Debenture would be convertible, at the end of the period of 4 years from the date of issuance, in one new additional share to be issued by the Company, against the additional payment by the Debenture holder, on the date of conversion, of the higher amount, for each Debenture, of the following: (a) BRL 4.00 (USD 2.00773), adjusted by the variation of the Selic rate in the period between the date of issuance of the Debentures and the issuance and payment of the new shares, or (b) BRL 6.00 (USD 3.01159).

The Board of the Company shall submit the Proposal to the analysis of the Board of Directors of the Company, for the subsequent possible call of a general meeting of shareholders of the Company to deliberate on the approval of the Proposal. The preemptive rights of the shareholders of the Company to subscribe the Warrants shall be respected in any event.

Vinci Partners has also informed that: (i) one or more investment funds under management of its controlled companies (collectively and indistinctly referred to as "Fund"), undertakes, irrevocably and irreversibly, to acquire up to 81.4% of the Warrants, in the amount of up to BRL 648m (USD 325.2m), if it acquires at least 109,000,000 of the Warrants issued by the Company, in the amount of BRL 436m (USD 218.8m) (“Minimum Allocation"), corresponding to 54.8% of the Warrants, after the first round of leftovers, (ii) for a period of two years, the Fund will not negotiate the new shares it subscribes, since the Minimum Allocation is met, and (iii) Messrs. Gilberto Sayao Silva and Alessandro M. M. Horta, President and Vice-President of the Board of Directors of the Company, will abstain to discuss and vote in any deliberation regarding the Proposal and the Transaction.

The full press release can be found here. Value USD 402m (proposed investment).  

Source Company Press Release(s).

Lenovo eager to make acquisitions in Brazil - Newswire Round-up 

27.05.2012 - Lenovo [Lian Xiang Ji Tuan], the Hong Kong-listed Chinese computer company, is eager to make acquisitions in Brazil to enlarge its market share in key emerging markets, according to a newswire report. Dow Jones reported on 28 May, citing Milko Van Duijl, Lenovo's president of Asia-Pacific and Latin America, that Lenovo is interested in acquiring or cooperating with all players in Brazil, but no concrete target has been identified so far.

Lenovo has a HKD 66bn (USD 8.5bn) market cap. Value USD 8,500m (market cap).

Source Newswire Round-up.

PayRoll in talks with advisers to IPO by H2 2013, chairman says

27.05.2012 - PayRoll, a private Chilean software company, is in talks with advisers for a potential MILA IPO by H2 2013, Chairman Hector Gomez Brain said.

Chilean law firm Montt y Cia will act as legal adviser on the IPO and PayRoll might appoint other advisors this year, Gomez said. PricewaterhouseCoopers is its auditor.

The company provides payroll outsourcing and a range of human resource management services such as headhunting and outplacement.

PayRoll’s shareholders are the Chilean public IT consultancy group Sonda [SONDA.SN] with a 41% holding, Chilean economist Rodrigo Castro and his family who own 33%, and Gomez Brain with 25%.

IPO proceeds will help the company to further improve the integration of human resources processes in the cloud and make it scalable to enter more markets as well as giving it the necessary funds to enter Brazil through acquisitions, Gomez said.

The listing will depend on how MILA evolves as well as Payroll’s performance in the Colombian market, where it is analyzing growth through acquisitions of businesses or portfolios of customer contracts from local companies, Gomez added.

Founded in 2005, PayRoll has operations in Argentina, Chile and Peru and recently opened an office in Colombia. It has 500 employees and ended 2011 with a turnover of USD 31m and EBITDA of USD 5m and no debt.

It aims to grow EBITDA by 25% before listing, Gomez said. The company forecasts revenues of USD 38m this year and would be ready to go public with USD 40m to USD 50m turnover and EBITDA margins of 18%.

Payroll is confident it will meet those financial goals this year, mainly organically, since it just clinched a large contract with Banco de Chile, Gomez said. It expects to announce two more contracts with other banks in Chile this year.

PayRoll could also announce a small bolt-on acquisition, in Chile this year that would widen its expertise in new business areas, but Gomez did not want to elaborate. The company is struggling to find suitable or available targets in other markets, Gomez said.

He ruled out Peru and Argentina for further buys and mentioned Brazil and Colombia as markets where the company was eyeing targets. An acquisition in those markets would only make sense if it involved a business with no less than USD 10m turnover, Gomez noted .

Payroll entered Colombia organically this year and is now seeking ways to accelerate growth, he said. It has identified some potential targets but it is not convinced if they are suitable for the group. Although the company has not ruled out the possibility, it is analyzing an acquisition of customer contracts from a local company, rather than a full takeover, Gomez said.

Payroll’s goal is to clinch an acquisition in Brazil, the executive said, adding that the largest companies in this market are not bigger than Payroll. He mentioned Brazil's privately owned Toutatis as having a similar turnover size to Payroll but said the company has not shown any willingness to enter M&A discussions with Payroll. There are many targets available in Brazil as most are private equity backed businesses, he added. " Nevertheless, we are analyzing whether it is best to get listed before approaching these companies as Brazil has proved to be a difficult market for similar size companies than Payroll", he said.  Value USD 31m (revenues 2011).  

Source Proprietary Intelligence.

Chocolaterie De Schutter mulls acquisitions in new business areas

27.05.2012 - Chocolaterie De Schutter, the private Belgian chocolate producer, would consider M&A as a means to expand, CEO Raphael Van Brempt said.

De Schutter produces artisanal hollow chocolate, specialising in private label Easter eggs and Santa Claus figures for retailers and chocolate makers in Belgium and abroad.

De Schutter has revenues of EUR 3.5m and EBITDA of EUR 1m, Van Brempt said. De Schutter expects to grow by 30%-50% in the next two-three years, he said. The company has 30-odd employees.

De Schutter is weighing various paths to expansion, including transitioning to branded products, Van Brempt said. Thus, De Schutter would consider acquiring other artisanal Belgian chocolate-oriented businesses, Van Brempt explained. De Schutter is also keen to expand into dessert production. Desserts complement De Schutter’s core business by filling its hollow chocolates, the CEO said. Furthermore, desserts constitute a “rapidly growing market,” he noted. Branching out into finished products such as chocolate bars is another possibility.

Alternatively, De Schutter may embark on diversification and internationalisation, Van Brempt said. De Schutter would consider buying into fruit juice makers in such emerging markets as Brazil and Peru, Van Brempt said. The summer-oriented seasonality of fruit juice consumption would reduce cyclicality by counterbalancing De Schutter’s focus on Easter and the Christmas, Van Brempt explained.

Furthermore, such a transaction would give De Schutter a way to tap increasing demand in these markets, he explained. In return, an emerging-market company would benefit from entry into Western Europe, from De Schutter’s “Made in Belgium” imprimatur, and from access to De Schutter’s craftsmanship, he said.

De Schutter will rely on in-house expertise and the advice of retained auditor KMPG to assess and acquire targets, Van Brempt said. De Schutter can finance expansion autonomously, Van Brempt said, citing its strong cash flow and EBITDA margin of 30%.

Van Brempt acquired De Schutter from its eponymous founding family earlier this century.

As regards De Schutter’s own long-term ownership structure, Van Brempt said he foresees leading the company’s expansion in coming years and has accordingly turned down regular approaches by sector players. Still, the need to safeguard continuity for De Schutter’s staff means the company must consider attractive bids, Van Brempt said: “the employees’ interests come first.”

Van Brempt spoke to this news service at the PLMA “World of Private Label” 2012 trade fair in Amsterdam. Value USD 4m (Revenue of Chocolaterie De Schutter).

Source Proprietary Intelligence.

Petrobras unit suspends USD 2.7bn order for 16 oil drilling ships with Estaleiro Atlantico Sul 

27.05.2012 - Transpetro, the shipping unit of state-run Petroleo Brasileiro (Bovespa: PETR4) suspended an order for 16 oil drilling ships with Estaleiro Atlantico Sul, Brazilian newspapers reported. The order with shipyard Estaleiro Atlantico Sul is for BRL 5.3bn (USD 2.7bn), Valor Economico reported today, citing a statement of the listed oil company known as Petrobras.

Transpetro gave Estaleiro Atlantico Sul until 30 August to find a technological partner, Rio de Janeiro-based newspaper O Globo reported, citing Sergio Machado, president of the Petrobras subsidiary. A partner is needed to substitute Samsung Heavy Industries, which pulled out of the shipyard venture in the middle of March, according to the reports. A partner to supply naval technology "is indispensable" for achieving productivity in the shipyard, Machado said, according to Jornal do Commercio in a report it published in April.

Estaleiro Atlantico Sul, a shipyard controlled by closely held Brazilian engineering and construction companies Camargo Correa and Queiroz Galvao, delivered the oil tanker Joao Candido to Transpetro on 25 May, almost two years behind schedule, Valor reported in its story today.

The new technology partner for Estaleiro Atlantico Sul should have a 30% stake, Valor and O Globo both reported in their stories.

The most advanced negotiations for a new partner in the shipyard to replace Samsung Heavy Industries are with Japan’s Ishikawajima-Harima Heavy Industries, or IHI, O Globo reported, citing unidentified sources. Valor didn’t name potential new partners in its story today.

Value USD 2,700m (size of suspended order).  Stake Value 30%. 

Source Valor Economico, O Globo.

Vale sells coal assets in Colombia to CPC for USD 407m 

27.05.2012 - Vale, (Bovespa: VALE5), the world’s largest iron-ore producer, agreed on Monday to sell its coal assets in Colombia for USD 407m, Valor Economico reported. The buyer is CPC, a subsidiary of Colombian Natural Resources, Valor reported in the online story, citing the Brazilian listed company for the information.

The sale includes 100% of the El Hatillo mine and the Cerro Largo deposit, based in the department of Cesar in northern Colombia. The sale also includes 100% of the port Sociedad Portuaria Rio Cordoba on the Atlantic coast of Colombia, according to Valor.

The sale of the thermal coal assets in Colombia is part of efforts to optimize the company’s portfolio of assets, Vale said in a statement. Valor reported. The plan that Vale had in Colombia ended up "not functioning," newsweekly Veja reported in an online story on 18 May, citing Murilo Ferreira, president.

The sale includes 8.4% of the railroad Ferrocarriles del Norte, which linked the mines in Colombia to the port, Valor reported in its story today.

Value USD 407m (announced price)Stake Value 100%. 

Source Valor Economico, Veja.

Banco Bradesco nears buy of Banco Santander’s Brazilian unit

27.05.2012 - Banco Bradesco (Bovespa: BBDC4), Brazil’s second-largest non-state bank, is near closing an agreement to buy the businesses of Banco Santander in Brazil, O Globo reported. Such an acquisition would enable Bradesco to become the largest bank in Brazil, surpassing government-run Banco do Brasil (Bovespa: BBAS3), the biggest lender in the country, and Itau Unibanco (Bovespa: ITAU4), Brazil’s largest non-state bank, O Globo reported.

The Rio de Janeiro-based daily did not give any sources for the front-page report that Bradesco is near an agreement to buy Banco Santander (Brasil). It cited balance statements of the banks involved for the market ranking, should Bradesco buy the Brazilian unit of the Spanish bank.

The Spanish bank has repeatedly iterated that it doesn’t intend to leave Brazil, its most profitable market. Banco Santander (NYSE: STD), the listed Spanish bank, isn’t planning to leave Brazil, Emilio Botin, chairman, told newsweekly IstoE Dinheiro. Brazil has more and more importance to Santander, Botin said, according to the weekly business publication in an interview published earlier this month.

The Spanish bank, though, could sell a stake of between 30% and 40% in its Brazilian unit, O Globo reported in its story this weekend, citing the first information that circulated by unidentified market sources. Such a stake could be worth BRL 64bn (USD 32bn), according to the  report.

Banco do Brasil negotiated to buy a stake but talks stopped on lack of agreement on price, according to O Globo. The interest of Banco do Brasil in buying a 49% stake in the Brazilian unit of the Spanish bank was opposed by Brazil’s President Dilma Rousseff, O Globo reported, citing an earlier report in daily newspaper O Estado de S. Paulo. President Rousseff had viewed such an acquisition as increasing market concentration, O Globo reported.

Banco Bradesco declined comment and Banco Santander could not be reached, O Globo reported.

Value USD 32,000m (reported though unconfirmed worth of stake) Stake Value 40%.

Source O Globo, IstoE Dinheiro.

Ultrapar agrees to buy terminal for liquid bulk in the port of Itaqui for USD 80.3m 

27.05.2012 - Ultrapar Participacoes (UGPA3: BZ; UGP: NYSE) announced that it has signed, through Ultracargo, a sale and purchase agreement for the acquisition of 100% of the shares of the company Temmar - Terminal Maritimo do Maranhao from Temmar Netherlands and Noble Netherlands, subsidiaries of Noble Group Limited. The acquisition value is BRL 160m (USD 80.3m), subject to the customary working capital and indebtedness adjustments on the closing date.

Additionally, Ultrapar will disburse a minimum extra value of BRL 12m (USD 6m), which may reach approximately BRL 30m (USD 15m) as a result of possible future expansions in the storage capacity of the terminal, provided that such expansions are implemented within the next 7 years.

Temmar is a modern and well-designed terminal in the port area of Itaqui, in the state of Maranhao, in the Northeast region of Brazil, with a capacity of 55 thousand cubic meters and used mainly for the handling of fuels and biofuels. Temmar has contracts with its clients for the entire capacity of the terminal and a longterm lease contract, which includes a large area for future expansions.

The port of Itaqui is the second largest port in liquid bulk handling in Brazil, with privileged location and efficient logistics, which includes access to railway. Responsible for supplying the fuel market in the states of Maranhao, Piaui and Tocantins, where fuel consumption has grown above the national average, the Itaqui port region has attracted various investments and new projects.

This acquisition marks the entry of Ultracargo in this important market and enhances its operational scale, strengthening its position as a provider of storage for liquid bulk in Brazil and adding 8% to the company’s current capacity.

The closing of this acquisition is subject to the compliance with certain usual conditions precedent for this type of transaction, notably the opinion of port authorities and, if applicable, the approval by a general shareholders’ meeting of Ultrapar. In the event the shareholders’ meeting is required and the acquisition is not approved, Ultrapar will pay to the seller a break-up fee of BRL 3m (USD 1.5m).

The company hereby clarifies that the acquisition of Temmar will not entitle Ultrapar’s shareholders to withdrawal rights, pursuant to paragraph 2 of Article 256 of the Brazilian Corporate Law. This transaction will be submitted to the competent regulatory authorities. Value USD 80m (deal value)  Stake Value 100%.

Source Company Press Release(s).

Pague Menos studies July IPO

27.05.2012 - Farmacias Pague Menos, Brazil’s third-largest drugstore chain, is studying selling shares in an initial public offering in July, Valor Economico reported Monday. The board of Pague Menos, based in Fortaleza, the capital of the northeastern Brazilian state of Ceara, has approved the IPO, Folha de S. Paulo reported Saturday.

Folha and Valor both reported that Pague Menos had filed with Brazil’s federal securities regulator CVM to carry out the IPO. Banco Itau BBA is the coordinating leader on the IPO while Credit Suisse and BB de Investimento are acting as underwriters, according to the two newspapers.

The IPO in July will depend on market conditions, according to Sao Paulo-based business daily Valor. Pague Menos will sell shares in the IPO in the second half of July only if the Brazilian equity market improves. The benchmark Bovespa index of the most-traded shares on the Sao Paulo Stock Exchange has lost 4% this year.

The shares are to be listed on the Novo Mercado, or new market, segment of the bourse, Valor reported. The Novo Mercado has higher corporate governance standards and will accept only common, or voting, shares for listing.

Source Valor Economico, Folha de Sao Paulo.

Azul Linhas Aereas to announce acquisition of regional airline Trip today

27.05.2012 - Azul Linhas Aereas Brasileiras is expected to announce today its purchase of Trip Linhas Aereas, South America’s largest regional airline, Folha de S. Paulo reported. The acquisition will raise the market share of Azul to 14%, Folha reported today without giving a source for its information.

The two airlines are expected to announce a merger today in which Azul will have 67% of the company resulting from the combination, Valor Economico reported today, citing unidentified sources in the industry, following the negotiations.

Azul Linhas Aereas had a 9.8% share of Brazil’s domestic aviation market in March, up from 7.6% in the same month a year ago, Folha reported, citing federal aviation agency Anac and the company for the information. Azul, the Brazilian airline started by JetBlue Airways founder David Neeleman in 2008, will have 80% of the company resulting from the merger, according to Folha in its report.

Valor reported that Trip is 20% owned by SkyWest, a US airline. Azul didn’t return a call seeking comment, according to the Sao Paulo-based business daily. Trip did not confirm the transaction.

Tam (Bovespa: TAMM4), Brazil’s largest airline, will lose from the merger as its code-sharing agreement with Trip should be canceled, according to Folha in its report on the merger expected to be announced today.

The merger, which took the industry by surprise, should be described by the two companies in a press conference this afternoon, Valor reported. Stake Value 67%. 

Source Folha de Sao Paulo, Valor Economico.