March 28 - A Brazilian ethanol producer is launching what could be an IPO, convertible bond and LBO all at once. Jeffrey Goldfarb talks to Breakingviews columnists about this wonder of financial engineering.
Financial engineering is alive and well in Brazil. An amazing IPO. That is also potentially help Leo that's also convertible bond it's all happening at the same time of political -- out. -- what is -- one masterful one happy complex. Package -- It. -- a listener and proud of what they're doing is there's a company it's -- -- Dreyfus commodities. Company in in Europe. And what they -- as they donate a Brazilian. Company capital I -- operative yeah exactly. And the -- producer needs to raise money things Dreyfuss does only have them explain it right to edit got a bunch of dead and they need to they wanna expand operations so what the meetings the trainer is money. But it -- makes it feels that they have to do it IPOs by next summer they've got they've promised minority investors -- -- tonight yeah. The promise they've done a it is secondary earlier this year and they want to make sure it goes. Roughly the same price -- take a loss on the try to they also took realistic -- and they had to pull it has in markets where and where are domestically right now -- have -- dead have been the best resentment 10% this year. So what they're doing is strike -- apparently saying well -- it will. By civil sold the shares. If they do poorly it will buy them back for you for exactly the same price 1015 months will if you. If the shares -- global -- back here at the same press centrists they're saying OK an original penalty accompany the public company only fifteen as opposed -- seriously you. You buy a put option with that along with your with. Yeah -- and usually it's it's it's a great idea if you if you trips -- -- so this self insurance at a comeback this weekend of extra money is a great thing it's people on this 1915 months' time is of the companies you said that the -- the money and it felt. If they need to buy these shares back at me a little bit hopeful that serve -- comes back the company goes private again yeah just have again and they kept him from -- -- It's I think it public and the private and that happens before they -- -- -- public -- this agreement the government has does that still count as having at least -- -- -- A public transaction happen as a -- has been done before there was -- wasn't there is one case in Europe there is a and -- company and they needed to similar or English as serious the shares did not do well they are down as it is basically a much simpler solutions that all of this year that the good discipline and it's in the doing all this thing it is simply go public at a lower price -- -- What this is -- -- remarkable it's exactly what this put the put option does is it's trying to entice people to get in to buy these shares at too high valuation essentially. You sell the shares for lower price you can avoid all this complexity. And -- but usually costs that would probably. There -- everything you. Well -- look upon one that we wore out probably about an awkward I think but more. --