April 15, 2019 - Last week the LSTA hosted a webinar, “Acquisition Finance in Latin America”, presented by Sabrena Silver and Eliza McDougall, partners of White & Case. Latin America M&A activity in 2018 included 600 announced deals for a total of about US$73 billion of value, representing the lowest deal value for nearly 15 years in the region. That is not surprising given that the region was contending with political and economic uncertainty with seven presidential elections and two transitions to power last year. Certain country specific factors should present opportunities for international lenders in 2019, including Argentina’s new infrastructure plan, the arrival of the new government in Mexico which may give rise to more M&A activity, and Colombia’s wave of road concessions which should continue to provide acquisition financing activity for international lenders, but country and currency risk factors specific to the region may still add to lenders’ concerns about lending in the region. The presenters highlighted that, in their experience, international lenders have been more active in providing bridge-bond take-out structures and noted that US style SunGard standard of conditionality is followed in the commitment documents for LatAm targets. The withholding tax, VAT, and other tax obligations that may apply to interest payments to offshore lenders were also highlighted.
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