You ask, I supply. Had a heck of a time finding it. Didn't show up in a text search on TBR and Telebras. When I added ADRs to the list I got just got a fragment.
Brazil To Clarify Telebras ADR Issues Next Wk - Spokesman
NEW YORK (Dow Jones)--Brazilian authorities will respond next week to investor concerns about the American depositary receipts of Telecomunicacoes Brasileiras SA (TBR), the huge holding known as Telebras that will be privatized this year, a Communications Ministry spokesman said Tuesday.
"There is concern in the ministry over the ADR issue, and there will be a clarification in coming days," ministry spokesman Chico Mendonca said.
"It's still not clear whether it will be the ministry or BNDES who will make the clarifications," he added, in reference to the Brazilian development bank in charge of privatizing Telebras.
Pressed for a date, Mendonca said it might be after Carnival, which ends on Wednesday and which paralyzes much activity in Brazil.
Investors have expressed concern over what they will end up holding after Telebras is split into three regional fixed wireline companies, eight cellular and one long distance provider, and then sold off.
The standard official answer until now has been that after the government's 21% controlling stake is transferred to private hands, Telebras ADRs would represent 12 shares, one for each underlying company.
However, telecommunications analysts have voiced fear that several of the new spin-offs might not comply with New York Stock Exchange listing requirements. This would force a de-listing of certain units from the NYSE, which in turn means that many current holders wouldn't be allowed to own the ADRs of downgraded holdings.
In particular, analysts mention a rule requiring companies listed on the NYSE to post a minimum $25 million in pretax profits over the last three years, averaging $100 million for the three years.
"There are some companies with liquidity problems," said FonteCindam telecommunications analyst Fabio Nazari. "In particular with the cellular companies in the North and Northeast."
These holdings, Areas 7, 8 and 9, bundle cellular companies in very poor and sparsely populated regions of Brazil.
At Merrill Lynch, telecommunications analyst Ray Liguori shares the uncertainty about the cellular companies.
"The biggest (concern) is that when they do the spin-off, all 12 companies are fully registered," either on the NYSE or NASDAQ, Liguori said. "We don't know for sure, but the eight cellular (holdings) might not have long enough profitability for NYSE listing, although they might qualify for NASDAQ."
Citibank's head of ADRs, Jim Donovan, is more optimistic. The profit compliance, he says, "is dependent on whether they structure it as holding companies or independently. In the case of holdings, the aggregate results may satisfy requirements of NYSE."
"NYSE has a set of rules, but there's some flexibility," Donovan said. "If there's a (company) history or something that complies with the spirit of the rules, then the exchange can make an exception."
Deutsche Morgan Grenfell analyst Auro Rozenbaum is also optimistic. "If they needed to downgrade listing to over-the-counter, NYSE would already have made the announcement." -By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com |
