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
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 Sàrl.
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."