Pampa Energia Mulls Bond for Petrobras Unit
Argentine power company Pampa Energia could emerge soon with a bond deal to help fund the acquisition of assets from Brazilian oil company Petrobras, a Pampa official told IFR.
Pampa won the right in last week to negotiate exclusively for up to 60 days to purchase a 67.2% stake in Petrobras Argentina, whose total market capitalization is around US$1.3bn.
The company could finance the deal with a combination of cash of hand, proceeds from the sale of its stake in gas pipeline operator TGS and a bond sale, Pampa's head of investor relations Lida Wang said.
"We are already doing all the preparation for a shelf filing," Wang said. "We have a very good relationship with banks."
Timing will depend on market conditions and spread levels, which are already under pressure amid expectations of more supply from the sovereign and other Argentine issuers.
Pampa could tap the bank market for a bridge loan in the interim, giving it some flexibility on any possible take-out in the bond markets.
The company has around US$300m of cash on hand, while its stake in TGS has a market value of over US$250m.
The company's shareholders approved a US$500m debt program in January, raising speculation that the utility was accumulating a war chest for an acquisition.
Aside from the M&A financing, the company could become more active in the international capital markets as it reaps the benefits of market-friendly reforms introduced by new Argentina President Mauricio Macri and increases spending on capex.
Created in 2005 through the merger of cash-strapped Edenor and Transener, Pampa has become Argentina's largest integrated electricity company.
Yet government-regulated tariffs since Argentina's 2001 default and high inflation have depressed its earnings and appetite for new investments.
"The generation system is completely collapsed," Wang said. "That is something you need funds (for) and you cannot get it locally. You have to get the funds in the international markets."
Its gas exploration and production subsidiary Petrolera Pampa could also eye an international issue to refinance short-term local debt with longer-dated dollar bonds in an effort to match its revenue base.
(Reporting by Davide Scigliuzzo; Editing by Paul Kilby and Marc Carnegie)
