Latin Finance - January/February 2012 - 47

54 airports, political and regulatory risks remained a major stumbling block for certain investors who still held fresh memories of the sovereign’s 2001 default, not to mention the government’s history of intervening in regulated sectors.

AA2000: Structuring a deal that ﬂies By structuring a deal that collected US dollar receivables from landing fees through the IATA clearing system o shore, leads were able to put some of those concerns to rest and help mitigate FX risks. The amortizer was backed by 46.8% of regional and international passenger use fees and 85% of duty free revenues. “You are splitting receivables, which is rare in our space,” says Michael Cummings, a director in Credit Suisse’s LatAm DCM team. “The structure was well plotted to survive the expense projections of the company over the next 10 years.” How much collateral the company could use was determined by its commitment to paying the government and other pledges it had made through another securitization. However, a springing lien allows it to capture additional use fees in the future once commitments to other deals expire. Other safety features included the assignment of indemniﬁcation rights should the concession be terminated. Putting together the transaction was made all the more di cult by authorizations required to approve the use of collateral and the overall complexity

of the country’s regulatory environment, bankers say. “This was cutting-edge in terms of what investors wanted to buy,” says Charles Moser, executive director and head of Andean and Southern Cone capital markets coverage at Morgan Stanley. Indeed, for a bond that was being sold in December, the transaction drew a considerable crowd of investors who at the time were bullish on Argentina and were keen to get their hands on a rare structure that guaranteed a supply of dollars o shore. With little competing supply, accounts had time to do their credit work. After emerging with 11% whispers in the wake of a roadshow that covered six cities in three days, leads were able to price what was the company’s cross-border debut bond at par to yield 10.75%. While the deal came tight to provincial debt, investors liked the structure enough to pile in and generate close to $2 billion in demand. The structure proved its worth in the secondary markets later in the year when the bond continued to outperform despite a souring in sentiment toward Argentina in the wake of President Christina Kirchner’s electoral victory. In early December, the bond was still trading at 103.00-103.75, even as other Argentine credits were left well below par. “It is not a project bond, but by adding to the strength of the collateral you make this a dynamic investment vehicle and you could see this in its secondary performance of the last 12 months,” says Cummings. LF

After losing more than $2 billion to bad bets in currency derivatives, the company was struggling to reﬁnance more than $3.2 billion in debt and derivatives claims. It was not until June of 2010 that Comerci, as the company is known, moved to pursue a debt restructuring under a concurso mercantil, using Mexico’s relatively untested insolvency law. In doing so, CCM became the ﬁrst listed company in Mexican history to ﬁle a pre-packaged restructuring, where the debtor and creditors strike an agreement before going to court. As envisioned, the restructuring would allow the company to work out a debt structure with key debt holders in hopes of speeding up a bankruptcy process that would normally take from six to eight years.

Comerci’s $3.2bn Workout

Restructuring

CCM sets stage for recovery Indeed, the pressure to address the company’s high leverage demanded expedient action. CCM’s net debt to Ebitda ratio had stood at 6.6 times in 2008, and 6.7 times in 2009, according to Moody’s. Similarly, the company’s interest coverage ratio had fallen as low as 1.7 times in 2009. Sales had dipped during that period, squeezing the company’s cash availability. CCM’s plan, advised by Rothschild, was to build a debt structure that would allow the company enough breathing room to continue doing business with no interruptions, matching debt amortization

Meeting the Challenge
I
n early 2010, almost two years after defaulting on its debt at the height of the 2008 ﬁnancial crisis, Mexico’s third largest supermarket chain, Controladora Comercial Mexicana (CCM), was mired in fruitless talks with creditors.

January/February 2012

LATINFINANCE 47

Latin Finance - January/February 2012

Table of Contents for the Digital Edition of Latin Finance - January/February 2012