Saesa to pre-pay US$150mn loan Jan.21

Chilean distributor Saesa will pre-pay a US$150mn loan on January 21 after the success of a bond issue on the local market, Saesa CEO Jorge Brahm told BNamericas. "The bond issue was more successful than we anticipated so we are going to pay our short-term debts next week, and get on with our business," Brahm said. The loan was originally due October 18 but the deadline was extended to November 8, and then extended again to April 4. Saesa owes US$115mn of the loan, while sister distributor Frontel owes US$35mn. Saesa will pay its loan with US$114mn generated from an issue of medium and long term bonds, and part of a US$93mn syndicated loan to Saesa and Frontel from Chilean banks BICE (which led the loan), BCI, Corpbanca, and Estado. "Wall Street does not distinguish Chile from the problems of Brazil and Argentina, so [Saesa's US parent company] PSEG decided to issue the bonds on the Chilean market," Brahm added. The bond issue was comprised of US$60.5mn in 7-year bonds at 5.39% interest, and US$53.5mn in 21-year bonds at 6.6%. The short-term notes were sold to Chilean mutual funds and local banks including BICE, while the long-term notes were sold to insurance companies, Brahm said. Salomon Smith Barney was the placing agent for the bonds, which were oversubscribed by 48%, Saesa said in a statement. Saesa will use US$33mn of its syndicated loan to pay debts, and US$25mn to boost working capital. Frontel will use US$23mn of its US$35mn loan to pay debts, and the remaining US$12mn for working capital. Both the Saesa and Frontel loans are for seven years and will be paid back at Chilean benchmark interest rate TAB plus 2% spread, which "is a very good rate," Brahm said. Saesa will also pay a US$35mn long-term loan held with Santander Bank in the first week of February, Brahm said, adding that the loan is no longer necessary after the success of the bond issue.