Steelmaker Ternium's purchase of $2.7 billion of shares in
Brazil's Usinas Siderúrgicas de Minas Gerais (Usiminas)
was nothing if not challenging: it called for funding to be put
together in a volatile climate for a borrower in Luxembourg, a
parent in Argentina and a target in Brazil.
DEAL OF THE YEAR: Syndicated Loan
Ternium $700m 5-year Loan
Ternium Investments and its affiliates agreed in November to
pay $2.2 billion for 27.7% of Usiminas' ordinary shares, with
the Ternium unit putting in $1.5 billion in cash. The price was
a hefty premium to enter Brazil. The loan was executed through
Ternium Investments' subsidiary Ternium Investment
The $700 million five-year amortizing senior unsecured loan
had to be put together the day before Christmas so as to be
able to fund the first week of 2012. The global coordinators
pre-funded the transaction in early January ahead of the bank
It went out to syndication in a difficult environment for
banks, in one of the first deals since the European debt crisis
"European banks were in a delicate state at the end of the
year," Jean-Philippe Adam, head of loan syndications at
Crédit Agricole, global coordinator on the transaction
with Citi, HSBC and JPMorgan.
"It was a very important acquisition for the region and for
the client," says Rodrigo Gracia, executive director at
JPMorgan. That the acquisition was done with cash made the
story even more compelling because it was unsecured and sold
without guarantees. That the contribution of the borrower's own
capital toward the Usiminas purchase was 68%, well above the
20%-30% standards, made the deal easier to accept.
The facility pays Libor plus 337.5 basis points. Santander
and Mizuho were joint bookrunners, with Intesa Sanpaolo,
Inbursa and Natixis as mandated lead arrangers. Bank of
Tokyo-Mitsubishi, CorpBanca, and UniCredit were arrangers.
Inbursa, Bank of Tokyo and Corpbanca were new lenders to the
borrower. The deal was oversubscribed by 50%.
Ternium's buy-in to Usiminas' controlling group helped
thwart a takeover by Brazilian steel producer CSN. Ternium
acquired 84.7 million common shares, its Siderar unit 30
million and fellow Techint Group company TenarisConfab 25
million. In the future, the steelmaker will focus on expansion
in a high-growth market.
"It was the most compelling and best story for 2012," Gracia
says. "They have a good story in the region and the leverage
out of that to continue with their strategy and to continue
bringing banks into their transactions."