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Acelen expected to record lower-than-projected EBITDA in 2023, high leverage

by Aline Lima

Acelen is expected to report EBITDA in 2023 that is well below its projections, leading the oil refinery operator to reach a high level of leverage, two sources familiar with the matter said.

A decline in the refinery's crack spread — the difference between the prices of crude oil and the refined products — has been pressuring cash generation, and Acelen has reduced its own EBITDA projections to USD 250m-USD 300m for this year, the first source said.

The company created by Mubadala Capital Group to operate the Mataripe refinery (formerly Landulpho Alves) recorded a negative EBITDA of USD 41m in 1Q23, according to a company document seen by Debtwire.

“Acelen will post USD 200m in EBITDA in 2023, at best,” the second source said, noting that this would mean a leverage ratio of 7x at the end of the year.

In the offering memorandum of the MC Brazil Downstream Participacoes (Ba3/B+) USD 1.739bn 7.25% senior secured 2031 notes, issued to finance the acquisition of Mataripe from Petrobras, the firm estimated USD 800m EBITDA for 2023, according to the second source.

The 2031 bonds traded at 62.625 today, according to MarketAxess.

˜Market [participants] are pessimistic due to poor crack spreads,” the first source said. ˜It is a volatile business, and high leverage is likely,” the same source noted.

The crack spread reduced in April and May, but it “has already improved in June,” and Acelen expects the trend to continue going forward, according to the company document. The average crack margin was USD 12.90 per barrel of crude oil in 1Q23, the same document said.

Meanwhile, Acelen has used tax credits it accumulated to obtain reimbursements, following the federal government's decision to gradually resume the collection of PIS and Cofins taxes on domestic gasoline and ethanol, as reported.

Acelen expects a PIS and Cofins taxes monetization of USD 24m in 2Q23, increasing to USD 108m in 3Q23 and to USD 164m in 4Q23, according to the company document.

On 30 May, the company refinanced an LFA, increasing the current commitment amount to USD 645m, from an original USD 500m, according to the same document. Acelen also has USD 500m in domestic letters of guarantee (fiancas), which in addition to its cash position will support liquidity, allowing capex and debt service, the document said.   

"The revision of [expected] result reflects changes in international crack spreads, which have been very volatile, impacted by global economic activities, the Russia/Ukraine war, and regulatory, fiscal and competition distortions in the Brazilian business environment," an Acelen spokesperson said in a written response to Debtwire. "Acelen always revises its projections, taking into consideration the most updated scenario of prices and business environment.".

The company is comfortable with its liquidity, and continues to advance its projects, the spokesperson wrote. Acelen "is following its business plan in 2023, focusing on operational improvements, cost reduction and on the implementation of its industrial maintenance program," the spokesperson said.