A service of

InterCement to select financial advisor ahead of bond refinancing

by Aline Lima

InterCement is in the process of hiring a financial advisor, ahead of the expected refinancing of its USD 551m 5.75% bond due 2024, according to a source close to and a source familiar with the matter.

The Brazilian cement maker has received proposals from two financial advisory firms, including Houlihan Lokey, the source close said.

Two other financial advisory firms are expected to present proposals by 11 May, the source close said.

A decision on the hiring of a financial advisor may be made next week, in a board meeting, according to the source close.

InterCement also plans to hire Brazilian and international legal advisors, but this selection process is a little bit behind the process of hiring a financial advisor, according to the source close.

Local law firms may present proposals to the company throughout this week, the source close said.

With the start of the advisor selection process, bank lenders Bradesco, Banco do Brasil and Itau Unibanco are expected to finally engage in talks with InterCement, the source close said. Some of the bond refinancing conditions involve changes in the banks’ debt contracts as well, but they have continued to stay away from the negotiation table, at the risk of delaying the bond refinancing.

The bond refinancing would allow InterCement to extend the amortization of BRL 866m (USD 174.78m) in domestic bonds held by the banks to 2027, as they are redeemable in May 2024.

The cement maker has been considering two alternatives to address the July 2024 bond maturity — most likely an exchange offer, or possibly a cash tender offer with a new issuance, as reported. The transaction will involve collateral, a higher interest rate and no haircut, as reported. The collateral could be a Brazilian plant or its Argentinian subsidiary, Loma Negra. The debentures have InterCement’s stake in Loma Negra as collateral.

Legal and financial advisors have been approaching InterCement bondholders, as reported.

At the same time, InterCement is in the middle of seeking strategic fundraising options for its operations in Mozambique and South Africa. In January, the company sold its business in Egypt, using proceeds to prepay short-term debt.

An official at InterCement declined to comment on the matter, and an official at Houlihan Lockey did not respond to a request for comment.

The 2024 bonds last traded at 67.75 on 8 May, according to MarketAxess.