Latin Finance - January/February 2011 - 53

DEALS of the YEAR
2010

shares and ordinary shares with voting rights. The Amaro family will have 80% of TAM’s voting shares while the remaining 20% will be transferred to LATAM,” says Larraín. All the preferred shares will be transferred to LATAM. TAM’s shares will be delisted and LAN will continue to trade under the new airline’s name on the Chilean and NYSE exchanges, in addition to also having BDRs listed on the Bovespa. TAM vice chairman Mauricio Rolim Amaro will chair the combined board, while LAN CEO Enrique Cueto will be the new CEO.

Another notable deal Claro y Cía worked on was Citi’s acquisition of a 50% stake in Chile’s LQ Inversiones, which controls Banco de Chile, the country’s second largest bank. Citi had been buying up stakes in LQ since 2007, when it bought 10.44%. In 2010, it increased participation in LQ to 50% by acquiring an additional 8.5% stake for about $510 million. The Luksic family of Chile holds the other half of LQ. Claro y Cía has been active on fronts other than M&A, including restructuring the debt of Cía Sudamericana de Vapores

increase, 10% of the company is on the exchange,” Valdés says. The deal raised 127.44 billion Chilean pesos through the sale of 12.3 million units at 10,350 pesos each, a 13.7% discount to the previous 11,992 peso close. The metals processor drew 1.165 trillion pesos in orders from 5,234 accounts, it says in a regulatory ﬁling. Molymet adds that about 20% went to pension funds, with other domestic and international institutional investors making up 50% of the sale. Retail took the remaining 30%.

The winning Chile team (L-R): Hernán Felipe Valdés, Cristóbal Eyzaguirre, Felipe Larraín, José Marìa Eyzaguirre, Nicolás Luco “All of the ﬂow of funds will go to the new LATAM structure without any leakage,” Larraín explains. This means LATAM shareholders will own LAN and TAM even if the airlines operate independently. TAM and LAN executives say they will operate as distinct airlines and independent brands, retaining headquarters in both Santiago and São Paulo, although they will e ectively be a single company. Cristina Acle, who covers LAN at Chile-based Corp Research describes the merger as “very good news.” It was to be expected since LAN had expressed an interest in becoming regional and had already worked together with TAM, she adds. Acle says the airlines already shared passengers thanks to a commercial partnership. (CSAV). “The company’s ﬁnances were complicated by the crisis and we were able to negotiate with the company’s creditors, a group of German shipbuilders,” says Claro y Cía partner Hernan Valdés. He adds that CSAV was able to raise $710 million via three capital increases, the last of which was for $360 million. As part of the transactions, the German shipbuilders took a stake in the company, part of which they sold to cover CSAV’s debt owed to them. They still possess a minority stake in CSAV, Valdés says. Claro y Cía was also involved in a $266 million equivalent November equity follow-on of metal processing company Molymet, understood to be the largest in Chile since 2007. “Molymet had shares trading on the local exchange, but they weren’t a lot. Now, with this capital Claro y Cía also advised Chilean telecom company VTR GlobalCom in its sale of a 20% stake to a unit of CorpGroup, which is controlled by local businessman Álvaro Saieh, for about $333 million in cash. The seller was Cristalchile. Claro’s partners are conﬁdent that the stream of transactions will continue ﬂowing this year. “There is a lot of conﬁdence not only in Chile, but in the region as a whole,” Valdés explains. “If you look at local companies’ share prices you will notice that they are back to pre-crisis levels or even higher. The only problem we see is the strengthening of the price of copper,” he adds. Valdés is worried that peso strength might hurt exporters and push company valuations too high for M&A. LF

January/February 2011

LATINFINANCE 53

Latin Finance - January/February 2011

Table of Contents for the Digital Edition of Latin Finance - January/February 2011