Brazil's Triunfo clinches $673m restructuring with banks

BOGOTA - 23 July 2017: TPI Triunfo Participações & Investimentos SA and a pool of about 20 banks have agreed on terms to restructure 2.113 billion real ($672.6 million) of debt, giving the Brazilian infrastructure firm a lifeline to finalize projects and downsize gradually.

The process will take place as an out-of-court workout, in which companies seek a limit on the influence of some creditors in the upcoming rounds of their restructuring, said Andre Bucione, managing director at Alvarez & Marsal Holdings LLC, which advised Triunfo on the process.

"Lenders were always satisfied with the company's willingness to discuss how to honor its debt, facilitating an accord that will be beneficial to all parties involved," said an executive at one of Triunfo's creditors, who requested anonymity in discussing terms of the workout.

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.

Triunfo had about 3.5 billion reais in total borrowings as of March.

While the out-of-court workout does not impose asset sales on Triunfo, it should accelerate the reshaping of a company that grew too big, too fast, the same executive said. A total of 82 percent of Triunfo's creditors adhered to the workout, Bucione said.

Brazil's state-controlled development bank BNDES, also a Triunfo shareholder, did not participate in the process.

Under the agreement, creditors will be offered two options: to be paid in full in eight years, four of which will have a grace period and the other four, fully amortized; or to take a reduction and get paid up to 110 million reais once Triunfo's legal team and a commercial court validate the restructuring, Bucione said.

Terms of the deal are similar to those reported by Reuters on June 19, when Triunfo agreed to sell a 50 percent stake in Terminal Portuário de Navegantes SA for about 1.3 billion reais plus an earn-out.

Triunfo did not immediately comment.

Expensive Loan

Since Reuters reported Triunfo's exit from the terminal known as PortoNave, common shares (TPIS3.SA) have jumped 47 percent to 4.30 reais.

A successful out-of-court workout could help Triunfo speed up the sale of stakes in a hydropower dam, a stake in an airport concession and other businesses, people told Reuters at the time of the port divestiture.

Concern about the pace of negotiations with creditors and a tussle with creditor and shareholder BNDES [BNDES.UL] had driven the stock down 42 percent in the two months through mid-June.

Triunfo's restructuring is the latest out-of-court workout among builders and banks in recession-hit Brazil. A recent one involved the oil drilling unit of Odebrecht SA, a builder ensnared in a massive corruption scandal that sought to renegotiate its debt.

The workout was devised to help Triunfo repay an 800 million-real, foreign-currency denominated loan from hedge fund Farallon Capital Management LLC, which bore very high interest rates, Bucione said. Triunfo secured the money putting a stake in the port as collateral.

For banks, the accord will help them avoid setting aside extra provisions on Triunfo's outstanding borrowings while maintaining financing for the company's toll road, airport and construction projects, people involved in the process said.

Creditors who seek to be repaid earlier will participate in an auction that will define the optimal haircut. They would be paid 50 million reais upfront and 35 million reais after court approval. The remaining 25 million reais would hinge on other conditions and another auction.