LatinFinance - January/February 2015 - 64

and Japanese trading companies," says
Rafael Biasoli, Amaggi's treasurer. "The
most important point was to establish the
Japanese interest."
Compared to trades Nexi had previously
supported, such as metals and mining,
agricultural export
contracts have short
tenors - often just
a year, coinciding
with the crop
cycle. Amaggi had
to persuade Nexi
it could maintain
adequate business to
pay the debt over six
years.
"That was one
of the biggest
challenges - to
establish the
guarantee for the
transaction, even
though the commercial contracts are
shorter term than the loan," says Pozzi.
Under the agreement that was eventually
signed, Amaggi must export 80,000 tons
of grain to Japan over a two-year period,
therefore avoiding the risks to production
of inclement weather in any one year.
"The key was not to connect volumes with
prices," says Pozzi.
"Historically," he says, "we have been
able to meet the volumes required." LF
Source: istockphoto

already surpassed it in soybean imports.
The transaction also furthers Amaggi's
efforts to develop its trading relationships
as Brazilian agricultural exports to Japan
increase, particularly in relation to those
from the US.

HEADING EAST: Brazilian firm Amaggi
closed the first agribusiness loan backed
by Japan's NEXI

RAFAEL BIASOLI, AMAGGI

"THE MOST IMPORTANT POINT WAS TO
ESTABLISH THE
JAPANESE INTEREST"
"Japan is a very important market for us;
we've been trying to develop it in recent
years," says Dante Pozzi, Amaggi's chief
financial officer.
The $200 million loan to Amaggi by
Sumitomo Mitsui Banking Corporation
(SMBC) has a term of six years. It is
expected to amortize with earnings from
Amaggi's export contracts, and is secured
by a lien on those contracts.
SMBC was named lead arranger, Nexi
agent, collateral agent, account bank,
facility agent and documentation agent.
Appleby, Milbank, Santos Neto, and
Walkers gave legal advice.
The deal was the first Nexi had done in
agribusiness. That meant the financing
required extensive work over nine months
to come together.
"We explained the business, how the
export of the commodities operates,
and the relationship between Amaggi

64 LATINFINANCE.COM - January/February 2015

LAW FIRM BRAZIL

Pinheiro Neto
Experience working on
capital markets deals for
some of the country's biggest issuers helped the firm
win business in a rocky
year
After a lull in cross-border activity from
Brazilian companies in 2014, many are
hoping that 2015 will prove a better
year. Pinheiro Neto, which worked on
LatinFinance's two winning liability
management exercises in 2014, is no
exception.
The Brazilian law firm's role on
Marfrig's June 2014 tender and new issue
- LatinFinance's 2014 Corporate Liability

Management of the Year - is part of what
made Pinheiro Neto stand out among
its peers. The company also worked
on LatinFinance's Sovereign Liability
Management of the Year, a complex, $3.5
billion bond exchange and new issue.
Pinheiro Neto set up a dedicated capital
markets team in the early 2000s, to serve
what partner Ricardo Russo describes
as the second wave of Brazilian financial
expansion. After debt capital markets had
a first rush of activity in the late 1970s, it
was not until the early 2000s that Brazilian
issuance picked up again. The economy
and political environment stabilized, and
foreign investment was incentivized.
At the same time, the Brazilian securities
commission, the CVM, introduced
regulations for companies issuing equity
or debt.
"We had this second wave of Brazilian
capital markets, from 2005 to 2008," Russo
says. "It was a dream for certain Brazilian
entrepreneurs."
That showed the government that the
capital markets were a viable option for
local companies to raise equity or debt.
Now, further changes from the CVM may
facilitate a pick-up in activity, the partners
hope.
"We are pretty excited for the next years,"
says Russo. "We think [local markets] will be
a mechanism that needs to be used by local
companies."
Already, the introduction of
infrastructure debentures has sparked
more activity in the local bond market.
"Since 2011, I wouldn't say there was a
third wave," says Russo. "But the use by
companies with infrastructure projects of
this mechanism, infrastructure debentures,
resulted in big public offerings. Then for
the first time I saw an environment that
resembled 2005, 2006 in Brazil. Once an
offering was registered, we had individuals
calling saying, 'I saw your name in the
prospectus, can I buy these debentures?'."
Incoming regulations may facilitate
the trend, the partners hope. The CVM's
blessing for private equity placements -
under the Instrução 476 used often for
debenture sales - is one such change.
Another is the possibility of drawing in
greater foreign investment with ADR-style
instruments for bonds.
Pinheiro Neto's capital markets team
has grown in size and organization since it
was established, tracing the expansion of
Brazil's financial system.
Maintaining a top-notch team in the
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