24 August 2017

VALOR ECONÔMICO, englische Ausgabe vom 24.8.17

Privatization package grows, even includes Brazilian mint 

Officials unveil aggressive plans to sell the more lucrative assets of state-owned operator Infraero, including its busiest airport

Privatization is good, but thinking only about the cash is dangerous

The government’s rush to sell infrastructure assets in order to plug the fiscal gap risks repeating prior mistakes

Billions in potential liabilities loom over Eletrobras

Investors will have to look closely at the state-owned giant's debts, many of which are linked to yet-to-be settled investor lawsuits

Clássico bank owner Juca Abdalla makes R$1bn on Eletrobras rally 

Investor holds 12.5% of voting stock in state-owned giant; 3G Radar, an investment firm, also saw its stake rise in value

Government will keep “minority control” without selling existing stock

At Tuesday’s market capitalization, a R$30bn capital increase would still leave the government with 31% of the shares in Eletrobras

Supreme Court ruling starts to affect federal revenues

Government will depend on proceeds from privatizations to improve its financial situation

Rush and improvisation 

Privatization may help government finances, but doesn’t solve structural fiscal problem

The sum of irresponsibilities 

What some lawmakers call ideological disagreements is nothing more than lack of arithmetic responsibility

Ethanol mills sue Petrobras for gasoline price freeze

Biofuel producers argue the state-owned company was ordered to use domestic price controls to tackle inflation, hurting their sales

Lack of demand due to crisis was main cause to decline so far, but lenders indicate capital market should take more prominent role now

Intricate financial arrangement would allow privatization proceeds to enter Treasury accounts

There is also reaction of legislators of the North region, where Eletronorte operates

Winners of next auctions will take over for up to 24 months before a definitive contract, for which they need to arrange long-term financing

Itaipu and nuclear plants to be separated from Eletrobras

Operations will not be included in privatization; state giant to continue with asset sales and efforts to reduce staff

Heineken and Coca-Cola distributors fight over contract termination

Dutch brewery intends to use structure of Brasil Kirin, which it acquired in February, instead of Coca-Cola’s to distribute its products

Ceratti partners negotiating sale to Hormel Foods 

Value of sale is approximately R$350m, according to people familiar with negotiations

SeedCorp turns to licensing after missing sales target

Company had forecast R$1bn in revenue by 2018 but now admits it will not reach goal, and decides to diversify into germplasm business

Ambev, Heineken and Grupo Petrópolis report strong growth in category whose retail prices are as much as 30% lower

Temer fights back against international isolation 

Meeting with European leaders, potential trade deal, and trip to Davos are in the works to show a more positive agenda

Government decides to privatize Eletrobras

Surprising announcement claims plan is to recover company and have it adopt stricter governance for Novo Mercado listing

Minority shareholders seek ways of suing the Batistas for damages caused to the company and gain the significant BNDESPar support

Plan raises further doubts about state-owned giant

New government proposal marks a sharp turn from the ongoing restructuring pushed by the company's management

Venezuelan rum proves to be crisis-proof

Amid economic and political challenges, Santa Teresa rum is growing production and even exports

Finance Minister Henrique Meirelles admits risk of government violating constitutional provision starting next year

Elena Landau says that Tasso Jereissati needs to take command to rebuild party after previous president became mired in corruption allegations

High deficits put government at risk of violating constitution

Investment cuts and primary deficit may force government borrowing to outpace capital expenditures, violating “golden rule”

Overleveraged meat producers look to shed assets

Asset sales loom as second-quarter earnings reveal higher than recommended net-debt ratios at JFS, BRF, Marfrig and Minerva

Limits on bank auto financing steers consumers toward consortium buying

Advent buys more stock and is already second-largest shareholder, with 10.48% stake in education company

Anthero Meirelles sees more solid signs of improvement as delinquency and interest rate fall

Marubeni in talks for port terminal in Santa Catarina

If deal goes through, TESC would expand the Japanese trading giant’s presence in São Francisco do Sul

Renova to complete restructuring with new strategic investor

Renewable energy company is negotiating capital injection from Brookfield after downsizing effort

Antitrust agency wants to hunt cartels with big data

Cade’s Cerebro project will begin looking for signs of cartel formation in government biddings

Litel, BNDESPar, Bradespar and Mitsui hold 44% of the common shares and intend to keep them for now, despite being free to sell part

Terminals will be divided into four groups and include Congonhas, according to Minister Moreira Franco; minister of Transportation opposes plan

Switzerland-sized area of Amazon cleared for mining

13 hours and 38 minutes ago
  • A month later than expected, President Michel Temer approved the opening for mining of 47,000 square kilometers between the north of Pará and south Amapá. The decision could fuel more conflicts between miners, conservationists and indigenous peoples in an area bigger than Switzerland, environmentalists say. The National Reserve of Copper and Associated Metals (Renca) was created in 1984 as a way of keeping the government in control of the exploration. But the development plans never prospered, and now the government wants to attract companies interested in producing gold, zinc, phosphate, rare earths and copper.

    Oi bondholders and export-financing agencies to offer new proposal

    13 hours and 38 minutes ago
    • Oi bondholders aligned with Moelis and G5/Evercore joined with foreign export-financing agencies to present a restructuring proposal that would convert up to R$26.1 billion of the telecom’s debt into an 88% stake in the company. The plan by the creditors – who are owed R$22.6 billion – includes a R$3 billion capital injection, would treat all unsecured debtholders equally, and make changes in corporate governance. Changes in the proposal that will be put forward by Oi at its next shareholder meeting further restricts dividend payments, and instead will use available cash to increase debt repayments, making it more palatable to banks holding Oi debt, sources told Valor. 

      ANP releases rules for 2nd and 3rd pre-salt auctions

      13 hours and 38 minutes ago
      • The National Agency of Petroleum, Natural Gas and Biofuels (ANP) has issued the tender and contract rules for the 2nd and 3rd rounds of auctions of pre-salt areas, slated for October 27. Winning bidders have until December 11 to pay the signature bonuses, which may go as high as R$7.8 billion if all lots attract buyers. Petroleum companies have until September 8 to express interest, and Valor has learned that Exxon and Chevron, which still don’t operate pre-salt assets, and CNOOC, already a partner in the Libra field, are eyeing the auctions. Market sources don’t see many surprises in the rules, arguing that the primary investment barriers were unrelated to them. But Matheus Nogueira, a director at Accenture Strategy, sees changes to local-content requirements and the end of Petrobras’s mandate as sole operator of pre-salt fields as having the potential to attract more bidders.

        Vulcabras to pay debt, expand lines with share offering proceeds

        13 hours and 38 minutes ago
        • Shoemaker Vulcabras plans to use proceeds from a planned share sale to pay off debts and modernize its manufacturing facilities, according to the company prospectus. The maker of Olympikus and Azaleia footwear - that last year posted profit after five years of losses - wants to pay down loans that members of the company's founding family took out during Vulcabras’s difficult times and which as of last year totaled R$250 million. The company also wants to invest some of the money to expand its Azaleia line of women's shoes.

          L’Óreal announces closure of Rio de Janeiro plant

          13 hours and 38 minutes ago
          • French cosmetics group L’Oréal will shutter an old plant in Rio de Janeiro late next year because of the still-challenging Brazilian market. L’Oréal is the leading purveyor of hair products in Brazil with a 23.4% market share, according to Euromonitor data from 2016. But the market’s overall sales fell 8% in volume and stagnated in value terms. One of the biggest lines produced at the Pavuna factor is Elseve, of hair products. Nevertheless, L’Oréal says Brazil continues to be one of its major markets.

            GTFoods creditors approve bankruptcy restructuring plan

            13 hours and 38 minutes ago
            • GTFoods creditors approved a plan that will allow the poultry processor, currently in bankruptcy protection, to restructure part of its R$950 million debt. Unsecured creditors agreed to receive R$440 million over a period lasting as long as 18 years from GTFoods, which filed for bankruptcy a year ago in the wake of soaring corn prices. Secured creditors with claims on R$241 million will be paid within 11 years. Labor liabilities totaling R$2.3 million will be paid in 12 monthly installments. Courts still need to sign off on the plan.

              Penido seeks investor for Aerovale project

              13 hours and 38 minutes ago
              • In bankruptcy protection since January 2015, construction and infrastructure group Penido is looking for an investor willing to capitalize its core venture, the Aerospace Business Center, formerly known as Aerovale. Penido says the center’s roles go beyond a regional airport and include logistics, industry and port operations. Twenty confidentiality agreements with potential investors were already signed since late May, the company says. The private airport started in 2013 as demand from companies supplying Embraer was soaring but slowed down when the group ran into trouble due to scarce credit and filed for bankruptcy protection.

                City of Rio changing health plan to attract providers

                13 hours and 38 minutes ago
                • Rio de Janeiro hopes to finalize by August 30 the details of its public notice for the registration of health care providers to treat some city employees and their families – a total of about 150,000 clients. The city government hopes to attract at least three companies to participate in the system, which currently consists of just one operator, Assim Saúde. The contract will likely include a co-pay by patients, after health care providers complained that they often spend more per patient than they are paid. The city government says that the total number of clients may climb to 420,000 active and retired employees and their dependents.

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