Telebras Spinoffs See Tepid 1st Day Of
Trading In Brazil
By MARGARITA PALATNIK
Dow Jones Newswires
NEW YORK -- The debut of trading in Brazil Monday of spinoffs of Brazilian
holding Telecomunicacoes Brasileiras SA (TBR), known as Telebras, faced an
indifferent reception from investors.
Market observers said that a bad session for international markets, combined
with little time to digest the scant financial information available from the
spinoffs, and a wait-and-see attitude, kept investors' money in the synthetic
securities that represent all 12 units.
The Sao Paulo Stock Exchange offers TELB30 and TELB40, basket
securities known as receipts, while Merrill Lynch has sponsored American
depositary receipts known as HOLDRs (TBH). The three are meant to give
market participants the choice of maintaining Telebras as the single stock they
held before the company's split and privatization on July 29.
"Most clients have chosen to keep the receipts, they haven't been active at all
in the subsidiaries," a trader said. "But the volume in the receipts is also very
light. Most firms are setting up their new spreadsheets."
About 90 minutes before market closing in Brazil, Telebras preferred receipts
(TELB40) were down 3.1% at 83.30 reals (BRL) ($1=BRL1.18), leading in
volume traded.
Dealers downplayed movements in the spinoffs, as the initial prices were set at
an auction early Monday.
Preferred shares in long-distance carrier Embratel Participacoes surged 94%
to BRL15.50.
Tele Norte Leste Participacoes fell 18% to BRL18, while Tele Centro Sul
Participacoes was up 67% at BRL10.
Telesp Participacoes climbed 59% to BRL30 and was among the most-traded
stock on the Bovespa. Telesp Celular Participacoes rose a modest 1.9% at
BRL8, on eight trades.
Market participants said that a delay in the listing of the individual companies'
ADRs in New York is further eroding activity in Telebras.
Monday a Brazilian government official said that the listing will happen after
Oct. 4 presidential elections, while Telebras issued a press release saying that
registration of the 12 companies before the U.S. Securities and Exchange
Commission isn't ready.
Initially, Brazilian authorities had predicted that New York listing would occur
prior to the privatization. Lately they were clinging to hopes that the units
would list simultaneously in New York and Brazil.
Analysts also complained about the lack of sufficient financial information from
the companies.
"The recently published data about the holdings was disappointing as it did not
contain as much information as was originally anticipated," said Deutsche Bank
in a note to investors.
"If you call the companies and ask for clarifications, they tell you to fax them
your questions and they say they'll get back to you within a week," echoed
Fabio Nazari, telecommunications analyst at Brazilian brokerage
FonteCindam. "They're still setting up their investor relations departments."
-By Margarita Palatnik; 201-938-2226; margarita.palatnik@cor.dowjones.com
and Stephen Wisnefski; 5511-813-1988; swisnefski@ap.org |
