June 19, 2017 / 9:45 PM / 5 months ago

Triunfo nears debt deal after port exit, sources say

SAO PAULO (Reuters) - TPI Triunfo Participações & Investimentos SA sold a 50 percent stake in a port terminal to partner MSC Mediterranean Shipping Co SA on Monday, a key step toward advancing the debt-laden Brazilian infrastructure firm’s turnaround.

In a securities filing, Triunfo (TPIS3.SA) said it sold the 50 percent it has in Terminal Portuário de Navegantes SA for 1.3 billion reais ($396 million) to MSC’s Terminal Investment Ltd SARL. Reuters reported earlier in the day that both partners had agreed on price and terms for the deal.

Triunfo, which has been a partner in the terminal known as PortoNave since 2001, could get a 90 million real earn-out and extraordinary dividends if some unspecified conditions are met, two people familiar with the deal said. The sale depends on antitrust and regulatory approval.

Asset sales have become a key part of Triunfo’s plan to reduce debt. Creditors have discussed a restructuring plan that would allow Triunfo to retain cash from potential divestitures while it downsizes, Reuters reported on May 11.

Without an agreement with creditors, Triunfo could risk the completion of future asset sales, people with knowledge of the company’s situation have told Reuters. Triunfo is negotiating the restructuring proposal with creditors individually, and the PortoNave sale could accelerate such agreement, they said.

Proceeds from the PortoNave stake sale are expected to mainly go to repay part of Triunfo’s 3.5 billion reais in debt, one of the people said - an indication that an accord with creditors is close. Triunfo has hired Alvarez & Marsal Holdings LLC to conduct talks with banks.

The restructuring talks have aimed at engaging creditors with a long-term turnaround at Triunfo, suggesting that banks that agree to take on a significant loss on their loans to the company may get repaid first, the sources said.

São Paulo-based Triunfo declined to comment. Efforts to obtain comment from MSC’s press office in Geneva outside business hours were unsuccessful.

AGGRESSIVE BORROWING

At that price, PortoNave was valued at about 11 times annual earnings before interest, tax, depreciation and amortization, said one of the people. PortoNave is considered one of the world’s most efficient port operators and was the only one of Triunfo’s main four business lines that turned a profit last year.

Apart from PortoNave, Triunfo may sell stakes in a consortium running Brazil’s Viracopos international airport and a hydropower dam. Reuters reported on March 27 that MSC’s TIL unit was likely to exercise a right of first refusal to buy Triunfo’s stake in PortoNave.

Triunfo borrowed aggressively at the start of the decade to fuel expansion in toll roads, electricity and airports. Still, Brazil’s worst-ever recession has eroded profitability at the company and about 1 billion reais of Triunfo’s debt will mature by the end of next year.

Common shares (TPIS3.SA) fell 2.3 percent to 2.92 reais on Monday. Concern about the pace of negotiations with creditors has driven the stock down 41 percent in the past three months.

Editing by Diane Craft and Bill Trott

Our Standards:The Thomson Reuters Trust Principles.
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