America Movil SAB, the biggest debt issuer in Latin America last year, will reduce bond sales in 2011, having met its needs for long-term financing and a $23 billion acquisition, the company’s chief financial officer said.
“I don’t foresee such exceptional operations,” CFO Carlos Garcia Moreno said last week in a telephone interview. “Today we have a good liquidity position.”
America Movil, the largest mobile-phone company in the Americas, will pay about 14.4 billion pesos ($1.2 billion) in dividends this year and split its stock 2 for 1. The Mexico City-based company issued $8.5 billion in bonds last year in Mexico and abroad, edging out the total debt sold by state-run oil producer Petroleos Mexicanos, according to data compiled by Bloomberg.
Garcia Moreno, 54, said he began meeting with banks on March 18 to replace a five-year-old, $2 billion credit line expiring in April with two syndicated revolving credit lines of $2 billion each. A dollar-denominated line will be for 3 1/2 years, and a euro-denominated line will be for five years, he said.
The credit lines will give flexibility to America Movil, controlled by billionaire Carlos Slim, if acquisition opportunities arise or debt markets tighten, Garcia Moreno said. Bank of Tokyo-Mitsubishi UFJ Ltd., Mizuho Financial Group Inc. (8411), Banco Bilbao Vizcaya Argentaria SA (BBVA), JPMorgan Chase & Co. (JPM), Intesa Sanpaolo SpA (ISP), Citigroup Inc. (C) and Societe Generale (GLE) have been involved in the discussions.
America Movil completed a $23 billion acquisition last year of Telmex Internacional SAB and its holding company, Carso Global Telecom SAB, both controlled by Slim. The purchase gave America Movil a majority stake in its former parent, Telefonos de Mexico SAB.
The company, which offered Telmex Internacional shareholders the choice of being paid in cash or stock, had to borrow to be prepared if a large portion of shareholders accepted cash, Garcia Moreno said. Shareholders ended up accepting 26.8 billion pesos in cash and 44.2 billion pesos in shares for Telmex Internacional, plus 222 billion pesos in shares for Carso Global Telecom.
The company spent an additional $2.7 billion between October and January to buy preferred shares of Net Servicos de Comunicacao SA, Brazil’s biggest cable-TV operator.
At the same time, America Movil was replacing bonds expiring in the coming years with longer-term debt at low fixed interest rates, Garcia Moreno said. That work is largely complete, he said.
This year, America Movil offered to exchange new debt for Telmex bonds totaling $1.3 billion. The company acquired about $370 million in Telmex bonds, and Telmex announced this month that it spent $394 million to pay off those bonds.
Last year’s debt sales included $4 billion in dollar bonds, a $3 billion sale in the euro and pound bond markets, $1.2 billion in Mexican bonds, $215 million in Swiss franc bonds and $198 million in Chilean peso bonds. The company continues to explore debt issues in a diverse group of markets because of the flexibility it provides and the access it gives to investors, Garcia Moreno said.
“It’s always preferable to have more options than fewer,” he said. Foreign investors who want to diversify from their local markets will find America Movil a good proxy for investing in Latin America, since the company has operations in 17 countries in the region, plus the U.S., he said.
America Movil has about 19.8 billion pesos in bonds and loans due through 2012, according to Bloomberg data. The company will generate about 147 billion pesos in free cash flow this year, according to estimates from Stifel Nicolaus & Co.
The stock split proposal, which will face an investor vote in a meeting to be held before April 30, is designed to make America Movil’s shares accessible to a wider group of investors, not just large funds, Garcia Moreno said.
The split, the second in America Movil’s decade-long history, would bring the price of the shares closer to where they first began trading after the spinoff from Telmex, he said. They closed at 9.95 pesos on their first day, Feb. 7, 2001.
America Movil rose 47 centavos to 32.80 pesos at 4:10 p.m. New York time in Mexico City trading.
The company also may list its stock in other markets to provide more access for investors, Garcia Moreno said. The shares are listed in Mexico, the U.S. and Madrid’s Mercado de Valores Latinamericano.
“It’s clear that the economy has improved, but it’s still a weak recovery, and there are doubts,” he said. “There are still reasons to stay alert.”
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