I get it. This is South America. Betcha someone gets paid off big time and the auctions go through either this week or next week.
Tuesday July 28, 5:40 pm Eastern Time
Brazil court order on Telebras seen minor hurdle
SAO PAULO, July 28 (Reuters) - A decision by a Brazilian court judge on Tuesday to suspend the auction of Telebras (TELB4.SA) might delay the company's sale, but is not expected to be a major hurdle in the
privatization of the nation's telecom giant, analysts said.''I believe the government has the right tools to combat these judicial problems,'' said Fabio Nazari, an analyst at investment bank Banco Fonte Cindam.
A Brazilian judge in the southern state of Parana issued an injunction
on Tuesday suspending the sale of Telebras (TBR - news), which was
slated to take place on Wednesday at 1000 local time/0900 EDT/1300 GMT
on the Rio de Janeiro stock exchange.
''I think the auction could still go ahead tomorrow, or at least this
week, in which case the results won't be in any way affected,'' Nazari
added.
The lawsuit was brought by independent federal attorneys who alleged
irregularities in the Telebras privatization process.
Brazil planned to sell the 12 units carved out of Telebras for up to $14 billion at auction. Three fixed-line operators, Telebras' long-distance carrier Embratel and eight cellular phone companies were slated to go on the block.
In a separate event on Tuesday, a Rio de Janeiro court issued an
injunction to block only the sale of long-distance carrier Embratel.
A member of the government's legal team said its lawyers would seek to
overturn the two injunctions in federal courts as quickly as possible.
Analysts said they were not surprised by the court decision on Tuesday, given the strong opposition to the sale sponsored by left-wing political parties and phone workers unions.
''It was kind of expected that we'd have some last-minute things pulled out of a hat,'' said Ray Ligouri, an analyst for Merrill Lynch & Co. in New York.
Ligouri said the court injunction could hold up the Telebras sale for up to two weeks without undermining investor interest in Latin America's biggest state asset sale to date.
''But of course, we're still optimistic that it could go through
tomorrow,'' Ligouri said.
Sergio Goldman, a telecom analyst at Banco Santander, agreed, adding
that the injuctions were widely expected not only by the financial
community but also by the govenrment itself.
''Not only analysts, but the government, and firms interested in buying Telebras were aware that this trouble with court orders could happen,'' Goldman said.
Although no one analyst believed the injunctions would cause any
long-term damage to Telebras' sell-off, they added the govenrment would have to struggle to get the telecom giant privatized.
They said more lawsuits were expected to be filed over the next few days even if government lawyers managed to overturn the current injunctions blocking the sale before auction time tomorrow.
''It seems we're going to have hundreds of these nuisances,'' Ligouri
said.Sixty suits seeking to block the Telebras sale have been filed in courts across Brazil by trade unions and other oponents of the privatization. Of that total, 11 have been thrown out, a government spokesman said.
Brazil said a total of 34 consortia has registered to bid on the
Telebras. International telecom heavyweights such as Telefnica de Espaa (TEF.MC), MCI Communications Corp. (MCIC - news), Sprint Corp. (FON - news) and Telecom Italia (TIT.MI) are expected to be among the bidders. |
