Latin Finance - June 2008 - 17

cutting edge corporates Building the Next Blue Chips by Dan Shirai and Ben Miller he ongoing LatAm M&A wave and boom in infrastructure and commodities fuel the emergence of a new set of corporate heavyweights. This rising second tier – building on last year’s excess liquidity and Brazil IPO boom – expands a universe long dominated by a small multinational cabal. It has a growing array of financing options in the private and public markets at various levels of the capital structure. Few LatAm financiers have heard of CNAA, for example. But the privately held Brazilian sugar and alcohol startup has already raised $1 billion in three separate financing rounds, counting on a host of global players. An IPO, slated for later this year or in the first half of 2009, is just another landmark in CNAA’s seasoned relationship with heavyweight investors that include The Carlyle Group and Goldman Sachs, as well as lenders like Bradesco, ABN AMRO and the IDB. “We’re laying the groundwork for the various investment funds that want to enter this sector,” Jair Steola, CFO of CNAA, tells LatinFinance. Steola oversees what he claims is a new project finance model for the sugar and biofuels sector, a non-recourse structure relying on a carefully assembled pyramid of equity, debt and secured financing. CNAA joins a new and dynamic group of ascending private LatAm entities, propelled by a vibrant beat from Brazil with fundamentally robust assets – commodities and infrastructure – at its core. Unlike Cemex, América Móvil, Vale and Techint – domiciled in the region but displaying all the characteristics of global corporate powerhouses – it includes new and established names that, in unprecedented numbers, are expanding the frontier of deal activity, through local markets, cross border financing, and aggressive M&A. T A new class of LatAm corporates is emerging with M&A flair and capital markets savvy. The main challenge is prudent management of hasty expansion. On the road to maturity: rising corporations face a dizzying array of financing options Creeping Down the Curve In Brazil’s agricultural sector, firms like CNAA and main shareholder SantelisaVale – which has the second largest crushing capacity in Brazil – are breaking ground on multiple fronts. They are executing innovative financing plans while also establishing blueprints for further investment. A participant in this trend is the IDB, a seasoned lender that has historically avoided the private sector, but recently refocused on corporates. Its $250 million A loan to CNAA at expected tenors of up to 15 years is certainly a novelty for the multilateral. “This definitely represents a step forward for us in terms of the amount of risk and the [greenfield] nature of the deal,” says an official within the IDB’s recently remodeled private sector arm. The multilateral sees CNAA as a stepping stone to financing deals in other agricultural sectors in other countries. BNP Paribas was tapped to syndicate a $300 million B loan with a final maturity of 13 years. Pricing was heard at up to Libor plus 350 basis points for the A loan, and around 300 basis points for the B portion. The A/B facility, still being syndicated as of midMay, is complemented by a $120 million seven year pre-export loan at Libor plus 275 basis points through Bradesco, Banco Espirito Santo and ABN AMRO. The company’s $330 million equity capital base, which makes all of CNAA’s debt financing possible, is held by June 2008 LATINFINANCE 17
Latin Finance - June 2008

Table of Contents for the Digital Edition of Latin Finance - June 2008
