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Brazil's Triunfo should sell PortoNave stake to cut debt: Eleven Financial
March 27, 2017 / 7:25 PM / 8 months ago

Brazil's Triunfo should sell PortoNave stake to cut debt: Eleven Financial

SAO PAULO (Reuters) - TPI Triunfo Participações & Investimentos SA (TPIS3.SA) should sell its 50 percent stake in Brazilian port operator PortoNave as part of the asset sales it needs to generate cash for looming debt payments, Eleven Financial Research said on Monday.

Selling the stake in Terminal Portuário de Navegantes, located in southern Brazil and better known as PortoNave, would help raise a net 1.25 billion reais ($400 million) for Triunfo, a logistics and infrastructure provider, Eleven said in a client note.

Analysts led by Adeodato Volpi Netto reiterated a price target of 11 reais for Triunfo’s stock, with a “buy,” high-risk call recommendation.

Asset sales are rapidly becoming a key part of Triunfo’s plan to reduce debt, the analysts said in the note. 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 in the third quarter.

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.

Two people familiar with the matter told Reuters that MSC Mediterranean Shipping Co SA, which already owns 50 percent of PortoNave, is a favorite to buy Triunfo’s stake, along with Triunfo’s nearby cold storage operation.

MSC has the right of first refusal and could pay the equivalent of 12 times expected earnings before interest, tax, depreciation and amortization for the assets, said the people, who asked not to be identified because there has been no public announcement about a possible sale of Triunfo’s interest in PortoNave.

Sao Paulo-based Triunfo declined to comment. MSC, based in Switzerland, did not immediately return an email message seeking comment.

Shares of Triunfo posted their biggest jump in three weeks on Monday, adding 3.5 percent to 4.42 reais. The stock is up 39 percent this year.

Debt minus cash reached 3.48 billion reais at the end of the third quarter, while earnings before interest, tax, depreciation and amortization slumped 21 percent in the first nine months of 2016.

“Triunfo’s problem is not its level of indebtedness, but the peculiarities of its short-term debt maturities,” the research note said. “On the other hand, judicial debt execution is an extreme, very damaging scenario for all creditors.”

State development bank BNDES [BNDES.UL], which recently executed collateral on an 800 million reais loan to Triunfo, has a 15 percent stake in Triunfo through investment holding company BNDESPar.

Triunfo is scheduled to release fourth-quarter results on Tuesday.

Reporting by Guillermo Parra-Bernal; Editing by Tom Brown

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