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Companies 177

Written by December 12 2018 0

Medellin-based credit union Cooperativa Financiera de Antioquia (CFA) revealed this month in a filing with Colombia’s Superfinanciera regulatory agency that it won a favorable AA rating for long-term debt from Bogota-based debt rater Value & Risk Rating (VRR).

CFA also won a favorable “VrR1” rating from VRR for short-term debt risk, according to the filing.

The filing, posted by the Superintendencia on December 10, shows that CFA’s net income through August 2018 rose to COP$4.77 billion (US$1.5 million), up from COP$3.99 billion (US$1.26 million) for the same period in 2017.

“The AA rating indicates a high capacity to pay interest and return capital, with a limited incremental risk compared to other entities or rated issues with the highest category,” according to VVR.

“On the other hand, the rating VrR1 corresponds to the highest category in investment grade, which indicates that the entity [CFA] enjoys a high probability in the payment of the obligations in the agreed terms and terms. The liquidity of the institution and the protection for third parties is good. Additionally, the ability to pay will not be affected by changes in the sector or the economy,” VVR added.

Among credit unions, CFA, founded in the year 2000, is ranked fourth by level of assets and assets within the five financial cooperatives of Colombia, VVR noted.

The company mainly caters to lower-income and middle-income clients (strata 1, 2 and 3 in Colombia’s system of income rankings) and has most of its business here in Antioquia.

CFA has 10 main offices, 498 employees, and 68 correspondent offices in seven Colombian departments (states), and continues to expand throughout Colombia.

In total, 85% of the loan portfolio typically goes to salaried employees, commerce, transport and agriculture, according to the filing. The top-20 loan clients represented just 4.27% of the total portfolio, the filing shows.

During 2019, CFA plans to start-up the second phase of its cell-phone-based “Mobile channel,” which seeks to expand the transactional portfolio; complete the modernization and optimization of its “virtual office” platform; and continue with the development of its “Networks” project, according to the filing.

Written by November 23 2018 0

Medellin-based textile manufacturing giant Coltejer revealed in a November 22 filing with Colombia’s Superfinanciera regulatory agency that it has hired a consultant to develop a financial restructuring plan in order to pay liabilities.

According to the filing, the company also seeks a credit worth COP$12 billion (US$3.7 million) to buy cotton feedstocks for its manufacturing plants here.

The company, whose majority shareholder is Mexico-based textile multinational Kaltex, revealed earlier this month that it posted a net loss of COP$19 billion (US$5.88 million) for third quarter (3Q) 2018, compared to a net loss of COP$7 billion (US$2.2 million) in 3Q 2017.

For the first nine months of 2018, Coltejer has posted a net loss of COP$32.7 billion (US$10 million) versus a net loss of COP$27 billion (US$8.3 million) in nine-months 2017.

The company employs 1,245 workers at two plants in the Medellin suburbs, one at Itagui and the other in Rionegro.

Textile makers in Colombia for years have been hit hard by below-cost Asian imports including contraband, resulting in heavy financial losses.

Written by November 23 2018 0

Medellin-based multinational power and utilities giant EPM announced November 27 that its board adopted a full-year 2019 budget of COP$17.4 trillion (US$5.3 billion), which includes a COP$1.1 trillion (US$337 million) payment of profits to its sole shareholder: the city of Medellin.

Another COP$1.1 trillion (US$337 million) in 2019 will go for repairs and continuing build-out of its 2.4-gigawatt “Hidroituango” hydroelectric dam in Antioquia, according to the company.

Fully 50% of the funds for the 2019 budget will come from continuing revenues (COP$8.6 trillion/US$2.6 billion); another 22% via the sale of its 10% interest in Colombian power producer ISA as well as its Chilean power and water assets (COP$3.8 trillion/US$1.16 billion); 6% from its credit resources (COP$1 trillion/US$306 million) and the remainder from other operations, including COP$438 billion (US$134 million) via dividends from national and international subsidiaries, according to the company.

Production and marketing costs will account for 32% (COP$5.5 trillion/US$ 1.7 billion) of the 2019 budget, while debt service will take 21% (COP$3.6 trillion/US $ 1.1 billion).

Operating expenses will account for 19% (COP$3.3 trillion/US$1 billion) of the budget, including payments to the city of Medellin. Other investments will consume 18% (COP$3.2 trillion/US$ 978 million) of the budget, while the remaining 10% (COP$1.8 trillion/US$550 million) will go to cash reserves, according to the company.

Credit-Line Approvals

Meanwhile, EPM announced November 22 that it won line-of-credit approvals totaling more than US$1 billion from two sources: Colombian banking giant Bancolombia as well as three divisions of global banking giant HSBC.

The Bancolombia line-of-credit for COP$1 trillion (US$313 million) will “facilitate the continuation of our investment plans in public-service infrastructure,” according to EPM.

That line of credit carries a three-year repayment term. These funds “will only be used when EPM requires them within the next 24 months,” according to the company.

Meanwhile, Colombia’s Treasury Ministry simultaneously cleared the way for EPM to sign separate contracts with three divisions of banking giant HSBC for a line-of-credit worth US$750 million, according to the company.

“Of these resources, US$215 million will be used to finance the investment plan (2014-2022) of the company and US$535 million will be used for general corporate purposes other than investment,” according to the Ministry.

Of that total, US$650 million will come from HSBC Bank USA and HSBC México S.A., while the other US$100 million will come from Grupo Financiero HSBC. Loan term is three years from the signing, at a six-month LIBOR rate plus 2.75% per year, and a 30-month availability period starting from the date of contract signing, according to the Ministry.

These new lines of credit “complement the plan to sell some assets of the company,” including EPM’s 10% stake in Colombian power generator ISA as well as Chilean power-and-water utility holdings, according to EPM.

The asset sales and new credit lines respond to future financial challenges resulting from problems with EPM’s "Hidroituango” hydroelectric project here in Antioquia.

EPM general manager Jorge Londoño de la Cuesta added that “this financing allows the company to strengthen its liquidity alternatives -- when our cash-flow requires that -- in the next 24 months.”

Written by November 22 2018 0

Medellin-based construction giant Conconcreto announced November 14 that its third quarter (3Q) 2018 net income rose 46.4% year-on-year, to COP$50 billion (US$15.6 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose by 6.6%, to COP$147 billion (US$46 million), while EBITDA margin climbed to 20.9%, from 14.7% a year earlier.

Gross revenues however dipped 25% year-on-year, to COP$703 billion (US$220 million), from COP$938 billion (US$294 million) in 3Q 2017.

In a separate November 21 posting to Colombia’s Superfinanciera regulatory agency, the company pointed-out that problems with EPM’s under-construction, 2.4-gigawatt “Hidroituango” hydroelectric plant haven’t had any follow-on financial impact to date on the “CCC Ituango” construction consortium, of which Conconcreto is one of the company members. Nor do the company's recent sales of some assets have anything to do with EPM's financial problems arising from the three-year delay of power sales from that project.

In the company’s infrastructure projects segment in the latest quarter, Conconcreto explained that it has signed a deal with Colombia’s Agencia Nacional de Infraestructura (ANI) to terminate the existing “Via Pacifico” highway contract because of geological problems in the sector Loboguerrero-Mediacanoa.

A new ANI contract aims to overcome those issues – and simultaneously free Conconcreto from certain excess-cost issues arising from the geological problems.

In its highway concessions division, Conconcreto signed a deal to launch construction of a section of the Soacha-El Muña highway near Bogota.

As for the proposed “Doble Calzada Oriente” (DCO) divided highway project east of Medellin (between Sancho Paisa and El Tablazo), this project awaits a final approval from Colombia’s Treasury Ministry. Once that’s completed, the project then will be put out to bid, with Conconcreto aiming to become the construction contractor.

As for its over-all construction backlog, Conconcreto reported that as of end-September 2018, COP$1.975 trillion (US$619 million) in projects are outstanding, two-thirds of which are in infrastructure and the remaining one-third in housing.

So far this year, Conconcreto’s construction services division has focused on projects for the “Pactia” commercial real-estate venture including Hotel Corferias (Bogotá), the El Ensueño Shopping Center (Bogotá), and Cedi Colgate Palmira (Valle del Cauca).

“Execution was also focused on projects for third parties such as the Chamber of Commerce of Medellín [Poblado branch], Admininstration EPSA (Valle del Cauca), Torre Avianca Calle 26 (Bogotá), second-stage Nova (Jumbo, Valle del Cauca), and complementary buildings for the Ecocementos plant (Antioquia),” according to the company.

Written by November 20 2018 0

Medellin-based gold mining giant Mineros SA on November 20 reported a 10.2% boost year-on-year in third quarter (3Q) 2018 net income, to COP$19.7 billion (US$6 million).

Earnings before interest, taxes, depreciation and amortization (EBITDA) for 3Q 2018 also rose 7.6% year-on-year, while EBITDA margin rose 13.5%, according to the company.

Cash cost of operations dipped 2.9% year-on-year, to US$824 per ounce versus US$873/ounce in 3Q 2017.

A stronger U.S. dollar this year has hurt world gold prices, but Mineros managed to offset some of this penalty by dollar hedging.

Colombian alluvial output has dipped this year (down 1.9%), but 3Q 2018 operations still were profitable, with net income up 23%. Nicaragua net income has been even better in the latest quarter, up 49.7% this year versus last, and production rose 7.7%.

A pending deal announced last month with Argentina-based Yamana Gold is expected to be completed by year-end 2018. That deal and related plans to boost gold production elsewhere in South America could help Mineros win a stock listing on the Toronto Stock Exchange (TSX), coveted by major miners.

Gran Colombia Gold Results

Meanwhile, Toronto-based Gran Colombia Gold (GCG) announced November 13 that its 3Q 2018 net income rose to US$12.4 million, up sharply from a US$1 million net loss in 3Q 2017.

However, for the first nine months of 2018, GCG reported a net loss of US$13.0 million, , versus a net profit of US32 million in nine-months 2017.

“The net loss reported for the first nine months of 2018 includes $22.2 million of losses on financial instruments, primarily triggered by the extinguishment of the 2020 and 2024 debentures in the second quarter, and a $7.6 million charge for the costs associated with the offering completed in the second quarter of 2018.,” GCG explained.

In addition, “the net earnings in the first nine months of 2017 included a reversal of impairment of the Segovia [Antioquia] gold mining operations in the amount of US$45.3 million,” according to the company.

Commenting on the results, GCG executive co-chairman Serafino Iacono said: “We are very pleased with the continuing improvements in our operating and financial results and the strengthening of our financial position . . .

“Our senior debt is now down to US$88 million and our cash position increased further in the third quarter to reach US$29 million at the end of September.

“With our trailing 12-months adjusted EBITDA surpassing the US$100 million level at the end of September, our focus on our high-grade Segovia operations to drive our cash flow generation is providing the funding required to support our ongoing exploration and capital programs.

“We are encouraged by the initial exploration results we reported in October from this year’s drilling campaigns at each of Segovia, Marmato and Zancudo and we will have further results to report as these program progress,” he added.

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Medellin Herald is a locally produced, English-language news and advisory service uniquely focused upon a more-mature audience of visitors, investors, conference and trade-show attendees, property buyers, expats, retirees, volunteers and nature lovers.

U.S. native Roberto Peckham, who founded Medellin Herald in 2015, has been residing in metro Medellin since 2005 and has traveled regularly and extensively throughout Colombia since 1981.

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