NEW YORK-Globo Comunicagues e Participagues S.A., doing business as Globopar, plans to sell a $300 million issue of 10-year senior unsecured notes to refinance a bridge loan and short-term debt.
Globopar, headquartered in Rio de Janiero, is Brazil’s leading media and telecommunications company. It has interests in the broadcast, cable and satellite TV, wireline telephony, cellular and paging services businesses as well as telephone-equipment manufacturing.
Its debt, all of which is denominated in U.S. dollars, is guaranteed by TV Globa Ltda. and TV Globa de Recife Ltda., which own and operate five broadcast TV stations in Brazil’s major cities.
“Globopar’s cellular ventures may … exploit Brazil’s poor telecommunications infrastructure if it can deliver timely activations at prices comparable to wired phones once the wireless networks are built,” said Robert Konefal, senior vice president, and Elizabeth Tallmadge, senior analyst, for the corporate finance group of Moody’s Investors Service, New York.
Moody’s gave the proposed debt issue a middle-tier speculative grade rating of B1, while Standard & Poor’s Corp., New York, accorded the issue a high-level speculative grade rating of BB-.
Despite its backing by strong companies, Globopar is venturing into additional businesses that will require substantial capital infusions and therefore increase the risk undertaken by its bondholders, Moody’s said.
“Globopar has a 36-percent interest in a cellular partnership called TT2 with AT&T (Wireless Services Inc.) that has a … bid for a cellular license covering … Rio de Janiero,” Konefal and Tallmadge said.
“If TT2 wins the license, Globopar’s pro-rata capital contribution … for the license and network likely will be significant, and it is unlikely the venture would return capital for years.”
Globopar also is bidding for cable TV licenses. Like cellular telephony, cable TV is “relatively new in Brazil and quite expensive compared to Brazil’s reported household-income levels,” the Moody’s analysts said.
However, Standard & Poor’s said the new note issue will, “cover most of [Globopar’s] debt maturities for 1998, and incremental short-term financing needs are not expected.”
