Chilean Auto Distributor Plans Bond Debut

Automotores Gildemeister, a distributor of Hyundai and other car brands in Chile, Peru and Uruguay, is preparing a debut dollar bond sale. AG is aiming for a 7-10 year deal at $250m-$300m, according to Fitch and Moody’s reports assigning BB and Ba1 ratings. The issuer plans to meet US investors beginning Tuesday and finishing the following Monday, according to bankers managing the sale. Proceeds from the proposed issuance will primarily be used to refinance existing debt and improve liquidity. Fitch finds that AG’s “moderate leverage” (total adjusted debt versus total Ebitda of 3.4x in 2010) to be among the main concerns, along with a limited product diversification. Hyundai accounts for more than 70% of its revenues. It is supported, however, by a strong market position and solid performance during the downturn of 2009. In addition to importation and distribution, AG is in the retail market through 174 owned or leased dealers throughout Chile and Peru, according to Fitch. JPMorgan is managing the sale.