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Argentina's Canuelas Hires BofA to Reboot Deferred IPO

Argentina's Canuelas Hires BofA to Reboot Deferred IPO

BofA to join banks including JPMorgan, UBS, HSBC and Itau. Canuelas weighs overseas bond sale to extend debt maturities

Argentine agribusiness group Molino Canuelas SACIFIA has hired Bank of America Merrill Lynch to help it raise capital with a reboot of its initial public offering of shares, which was suspended in November, people with knowledge of the situation said.

Bank of America, the top underwriter of Argentine equity deals, has joined the group of banks that participated in a previous effort to raise as much as $333 million. Canuelas may revisit the market for an initial offering as soon as late February, said the people, who could not be named because the matter is private. The sale was previously halted due to "market volatility," the company said the day it was expected to price.

Among the revisions under evaluation are changes to how much of the proceeds go to the company and how much go to the selling shareholder. In the original proposal, Canuelas had sought to sell 58.5 million shares at $4.70 to $5.70 per share ($14-$17 per American Depositary Share). Half of the shares were offered by the company and the rest by shareholders and members of the controlling Navilli family, including Chief Executive Officer Aldo Navilli.

Canuelas is also studying whether to sell overseas debt to make itself more attractive to international investors spooked by its high short term net debt-Ebitda ratios. According to an analysis by consulting firm Delphos Investment, the company’s 12-month net debt-Ebitda ratio was 5.9x by August. Canuelas may seek to raise about $300 million in an international bond sale to extend its short-term debt maturities. The timing of the debt sale with regards to the IPO and its size are under evaluation and subject to board approval, one of the people said.

The other banks involved in the IPO continue to be JPMorgan Chase & Co, UBS Group AG, HSBC Holdings PLC and Itau BBA International Plc for the sale abroad, and AR Partners SA and Grupo Supervielle SA for the Buenos Aires portion of the sale.

A representative from Molino Canuelas declined to comment, as did Bank of America, Itau and JPMorgan. UBS and HSBC weren’t immediately to comment.

Argentine companies raised $3.8 billion in overseas equity sales in 2017, doubling the amount sold in 2016, riding strong momentum amid high investor demand for emerging market assets. Other companies in the pipeline for foreign listings include airport operator Corporacion America Airports SA, electricity generator Central Puerto SA, biotechnology company Bioceres and energy company Genneia SA.

Canuelas is known domestically for consumer brands like its 9 de Oro savory biscuits, which are typically paired with the national beverage, mate, as well as its namesake vegetable oil. The company also sells ingredients like wheat flour to food companies, and agribusiness services such as wheat storage. Its most profitable segment is retail products, with gross margins greater than 30 percent, according to a roadshow presentation reviewed by Bloomberg.

Canuelas Chief Financial Officer Alejandro Matoso, who was an investment banker at Morgan Stanley before joining the company in February, resigned for personal reasons Jan. 9, the company told local regulators. He was replaced by the company’s Chief Accounting Officer Cristian Cotone, who had previously been CFO from 2014 to 2016.

Pablo Rosendo González & Carolina Millan

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