SAO PAULO, Feb 1 (Reuters) - Talks are on track between Brazilian logistics operator Hidrovias do Brasil SA and its lenders over a plan for the company to repay existing project finance debt with proceeds from a recent note issue, a person close to the matter told Reuters.
The move, designed to give the company more flexibility to evaluate new projects to move commodities on Brazil’s under-explored river systems, follows the sale of $600 million in debt notes in mid-January, the source said.
Hidrovias, which is highly leveraged, will likely reduce its average borrowing costs to around 130 percent of the benchmark CDI rate from a current 160 percent when talks end, the source said.
Hidrovias’ debt totaled 2.2 billion reais ($694 million) at the end of September, according to the preliminary bond prospectus seen by Reuters.
The debt swap involves repaying existing project finance loans, giving Hidrovias more freedom to manage cash from more mature river port projects and invest in new ventures, the source said.
Hidrovias’ clients include iron ore miner Vale SA , which accounted for about 32 percent of its revenues in the nine months through September, the prospectus said.
China’s COFCO Corp, Japan’s Mitsui & Co. Ltd and Russia’s Sodrugestvo Group SA are also customers, the source said.
Based on the current terms of Hidrovia’s take-or-pay contracts, it will collect total revenue of about 11.1 billion reais ($3.5 billion) through end-2039, the bond prospectus said. The sum includes revenue from contracts with COFCO. Those had to be amended after the Chinese company, which acquired the global assets of Nidera BV and Noble Group, struggled to originate the amount of grains expected under the original agreements, the source said.
On Jan. 8, Hidrovias said it had extended the duration of the COFCO contracts until 2031, while raising the maximum volume contracted by 9.630 million tonnes of grains.
COFCO did not immediately reply to a comment request. ($1 = 3.1703 Brazilian reais) ($1 = 3.1688 reais) (Reporting by Ana Mano)