August 5, 2019 / 8:53 PM / 3 months ago

CGG hopes new contracts, financing eases sale of logistics unit CLI - sources

SAO PAULO, Aug 5 (Reuters) - Brazilian farm group Cantagalo General Grains SA (CGG) expects recent business deals and fresh capex financing to speed up the sale of its logistics unit Corredor Logística e Infraestrutura (CLI), a deal under negotiation for two years, two sources involved in the deal told Reuters.

The sale of the unit, known as CLI, could raise up to $200 million and is pivotal to the group’s debt restructuring, one of the sources said. The estimate is based on the enterprise value of similar deals at Itaqui, the northern port where the unit operates a grain terminal as part of the “Tegram” consortium.

CGG, majority owned by Brazil’s Coteminas with a minority stake held by Japan’s Sojitz Corp, declined to comment.

CLI signed long-term take-or-pay contracts ahead of the proposed sale, which helped it to increase cargo movement by 37% year-to-date at Itaqui, compared with 8% growth for the entire consortium, the second source said.

CLI also obtained a $12 million bridge loan from U.S.-based Farallon Capital Management, with which it prepaid mandatory capital expenditure and eliminated near-term financing risks, the second person said.

A third source said Farallon had extended the bridge loan, declining to elaborate.

CLI’s sales process may also advance quicker after the government awarded Rumo Logística SA a license to explore a railway connecting Brazil’s farmlands in the south to Itaqui in the north, making CLI more appealing to buyers, the sources said last week.

Prospective bidders for CLI include two Asian infrastructure funds, Rumo itself and logistics firm VLI, the sources said. VLI is partly owned by miner Vale SA.

Rumo declined to comment. VLI did not respond to a request for comment.

CLI operates in Itaqui as part of the “Tegram” consortium comprising stakeholders Glencore, Brazil’s Amaggi, France’s Louis Dreyfus and Japan’s ZEN-NOH. Japan’s Toyota Motor Corp and U.S.-based CHS Inc also operate there.

The consortium runs four warehouses in Itaqui, each with 500,000 tonnes of grain capacity.

The terminal’s expansion, costing 239 million reais ($69 million), involves the installation of new belts and a shiploader to double its overall annual capacity to 12 million tonnes of grains by 2020, according to Itaqui’s port authority.

$1 = 3.8856 reais Reporting by Ana Mano; Editing by Richard Chang

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