NEW YORK-Citing unfavorable market conditions, Colombia’s largest cellular carrier, Celumovil S.A., has postponed indefinitely its plans to go public.
Celumovil’s decision has not, however, altered plans by another local carrier, Occidente y Caribe Celular-doing business as Occel Celular S.A.-to sell 62 percent of its stock March 26. Occel will auction approximately 51 million shares on Colombia’s three stock exchanges at a previously announced base price of $5.34 each.
Last month, Mauricio Campillo, company president, had said Occel planned to file with the Securities and Exchange Commission to offer American Depository Receipts equal to 5 percent of the company’s shares. Rather than selling them to the general public, however, Campillo said they would be issued to investors that bought $100 million in Occel bonds in 1996. These investors later agreed to interest payments in the form of stock options rather than cash. As of March 5, however, the SEC showed no record of any such filing.
Ten major investors are selling their stake in Occel, including U.K.-based Cable and Wireless plc, which owns 22.3 percent, and Japan’s Itochu Corp., which has 2.7 percent. Campillo said March 4 that possible buyers include Bell Canada and BellSouth Corp.
Celumovil’s initial public offering would have been the first in Latin America this year and the largest in dollar value in Colombia’s history.
The company filed with the Securities and Exchange Commission Jan. 27 to register an IPO of up to 9.35 American Depository Receipts, each representing two shares of common stock. The anticipated price range was $14 to $16 per ADR.
Celumovil planned to sell 5.6 million ADRs in the United States and Canada. It also planned to sell 4.7 million shares of its common stock in Colombia.
Through companies it owns, Valores Bavaria controls 83.1 percent of Celumovil. After the IPO, Valores Bavaria would have reduced its stake to about 71.4 percent.
Santander Investment, Salomon Smith Barney and J.P. Morgan & Co. were underwriters for the IPO, according to the SEC filing. They have not indicated whether Celumovil would attempt to go public again in New York, where the carrier said it had received approval for listing on the New York Stock Exchange.
According to analysts interviewed by Reuters, investor uncertainty and concern about slowing economic growth in Latin America contributed to the IPO withdrawal decision. Equity mutual funds specializing in the region experienced large outflows of capital during February. Just before Celumovil announced the postponement, the Colombian peso also had declined in value relative to the dollar.
They further said that a small country like Colombia presents a comparatively illiquid market for investors, which want to retain the option of selling shares quickly on the secondary market.
Another factor cited as a possible contributor to the IPO withdrawal decision is that the planned share price for Occel’s new equity was high relative to that of Telebras. Stock of the Brazilian telecommunications conglomerate is considered a benchmark for the region.
