Mexican tycoon Salinas clinches Iusacell deal
Tuesday July 29, 3:40 pm ET
By Noel Randewich
MEXICO CITY, July 29 (Reuters) - Mexican tycoon Ricardo Salinas won control of Mexico's Iusacell on Tuesday after major shareholders brushed aside higher rival bids in a ugly fight for the No. 3 mobile phone operator.
Majority shareholders Verizon Communications (NYSE:VZ - News) and Vodafone Plc (London:VOD.L - News) sold their combined 73.9 percent stakes in debt-laden Iusacell to media magnate Salinas, who offered in June to buy all its shares for a total of $10 million, plus $811 million of debt.
Investment fund Fintech Advisory, which has a sizeable debt stake in Iusacell and which last week offered $40 million for the cell phone company in a third and final bid, lost out, even though its price was four times higher than Salinas'.
Verizon, the largest U.S. local telephone company, and British-based mobile phone leader Vodafone did not budge from their original accord to sell their stakes to Movil Access, a paging company owned by Salinas.
Spokesmen for Salinas had said the agreement with Vodafone and Verizon included a "lock-down" clause which effectively blocked other bids.
"The operation closes this afternoon at 4 p.m. (5 p.m. EDT)," said Hector Romero, investor spokesman for Grupo Salinas, the umbrella company of the Mexican billionaire, referring to the technical closure of the deal.
Fintech officials were not immediately available for comment.
One massive block trade on the Mexican bourse suggested at least one of the two major shareholders had already offloaded its stake in Tuesday's trading session.
But the stock of Iusacell (Mexico:CELV.MX - News) on Tuesday continued to trade far above the Salinas offer price of 0.057 pesos per share, surging 17.50 percent to 0.47 pesos, while its ADR (NYSE:CEL - News) jumped 15.49 percent to $4.40.
"It's pure speculation," said Rogelio Urrutia, an analyst at Santander-Serfin in Mexico City. "I would recommend selling them."
VOWED TURNAROUND
Salinas, who already has an indirect 46.5 percent stake in the troubled mobile telephone company Unefon, has vowed to turn Iusacell around.
Analysts say synergies could exist between Iusacell and Salinas' other companies, like retailer Elektra and Unefon, although the billionaire's first task will be to restructure the company's looming debt.
Iusacell is in default on a $266 million syndicated bank loan and has $350 million in bonds due in 2006 and $150 million due next year.
"The debt is so large that if they don't restructure, the company won't be viable," said Santander-Serfin's Urrutia.
Delaware-based Fintech could now insist Iusacell pay its already overdue debts, but it too could be forced to accept something less than 100 percent of the debt's face value.
Or, if Salinas offers, Fintech could agree to an equity stake in the company, analysts say.
Merged or separate, Iusacell and Unefon could benefit each other.
Unefon concentrates on Mexico's prepaid market, while Iusacell's strength is in its monthly plans. And Iusacell's nationwide coverage could bolster Unefon's limited network.
Analysts also said Iusacell services could also be sold through the Elektra retail chain, majority-owned by Salinas.
Elektra last year began to sell Iusacell competitor America Movil's (Mexico:AMXL.MX - News; NYSE:AMX - News) handsets in its 850 outlets throughout Mexico.
Vodafone bought into Iusacell, already under the operational control of Verizon, for close to $1 billion in 2001. |
