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Citigroup, Inc.
Dow Jones Newswires -- January 8, 1999
Argentina's Baesa CEO: Rights Offering Met Expectations
By Camilla Gallagher
BUENOS AIRES (Dow Jones)--Argentine bottler Buenos Aires Embotelladora SA (BAE), or Baesa, said demand for its $614 million rights offering met the company's expectations.
"The results were in line with expectations. That is, a small percentage of holders decided to exert their preferential rights," Baesa's Chief Executive Officer Osvaldo Banos said in an interview Friday.
As reported, Baesa late Thursday said it completed the $614-million rights offerings for up to 3.55 billion class B common shares at a subscription price of about $0.17278.
Baesa said a total of 19.0 million shares were subscribed to, of which 18.8 million came in the form of American depositary receipts. Another 139,650 shares were subscribed to by holders of the company's ADRs through Accretion Rights.
"Existing holders subscribed to only 0.5% of the total shares offered. That means almost the entire offering will be subscribed to by our creditors," said Banos.
Under the terms of the restructuring agreement, Baesa's creditors agreed to buy any shares left unsubscribed during the rights offering.
"Citibank NA (C) will likely end with about 30% of the company, BankBoston (BKB) with a little over 15% and Vereins (G.VHB) with about 15%," said Banos. U.S. bottler PepsiCo Inc (PEP), which now owns about 24% of Baesa's capital, will "likely have about 9% after the restructuring," he said.
The rest will be in the hands of small holders.
Baesa is PepsiCo's largest non-U.S. bottler.
On Dec. 2, Baesa amended its restructuring agreement with creditors to reduce its debt by $100 million. The amended agreement calls for the company's $727 million of debt subject to restructuring to be exchanged for $113 million in new debt and the proceeds of the $614 million rights offering.
On Dec. 7 Baesa announced it planned to issue the equity and new debt instruments to complete its financial restructuring once the rights offering was completed.
The restructuring process will "hopefully end in the first few weeks of February," said Banos.
Once that happens, "we'll immediately submit the necessary applications to the New York and Buenos Aires stock exchanges requesting that trading of Baesa shares resume," he said.
The Buenos Aires Stock Exchange suspended trading of Baesa shares in May 1997.
After the restructuring, Baesa will have $150 million in debt and a net worth of $170 million, said Banos.
"Baesa will have a completely rehabilitated financial structure," he said.
Banos said the company looked upon the rights offering - completed Jan. 6 - and the entire restructuring process with optimism.
"We're reaching the final stage of the restructuring process, and leaving behind a difficult period for the company," said Banos. "Now we can turn our attention 100% to our clients' needs."
Regarding Baesa's share structure, Banos said it's still possible that a controlling stake could change hands. After all, the company's new owners are banks, which have little experience in the bottling business, he said.
"The banks will have to make a decision over what to do next. I'm sure they'll evaluate their options and go from there. We have no knowledge of what their intentions are," said Banos.
In the past, companies rumored to be interested in Baesa included Chile's Compania Cervecerias Unidas SA (CCU); and beer giants Quilmes Industrial SA of Argentina (LQU) and Companhia Cervejeria Brahma Ltd (BRH) of Brazil.
Created in 1989, Buenos Aires Embotelladora SA (BAE), or Baesa, rapidly expanded outside Argentina to become PepsiCo Inc.'s largest non-U.S. bottler. Aside from Argentina, it holds the PepsiCo franchise in Uruguay. U.S.-based PepsiCo owns about 24% of BAESA's capital.
Headquarters: Diogenes Taborda 1533, 1437 Buenos Aires.
Significant developments: PepsiCo took operating control in July 1996 amid Baesa's mounting losses, and kicked in $40 million in new funds a month later when Baesa's creditors allowed it to defer until after March 1997 some payments on $520 million in debt.
In May 1997, the Buenos Aires Stock Exchange suspended trading of Baesa shares.
Baesa sold its Costa Rican and Brazilian units in two separate deals in August and October.
In January 1998, shareholders approved a deal between Baesa and its creditors to convert $250 million in existing debt into new negotiable obligations, and into new shares equaling at least 98% of Baesa's equity.
In May, holders of 94.6% of Baesa's $60 million in 8.5% Eurobonds due 2000 agreed to swap their debt for new bonds or a mix of debt and equity.
In October, Baesa restated its results in accordance with U.S. generally accepted accounting principles, cutting its fiscal 1995 net income to $29.8 million from $44.8 million; and its fiscal 1996 net loss to $437 million from $452 million. It also won approval from the U.S. District Court for the Southern District of New York of the settlement of a class action suit brought against Baesa for alleged violations of U.S. securities laws.
In December, Baesa filed with the Securities Exchange Commission for a $614-million rights offering, which ran from Dec. 7 to Jan. 6.
On Jan. 6, Baesa completed its rights offering, during which 19.0 million shares were subscribed to.
All figures in dollars, based on U.S. GAAP
3Q 3Q FY FY
ended ended ended ended
06/30/98 06/30/97 9/30/97 9/30/96
Net Sales 58.3 Mln 130.5 Mln 655.0 Mln 703.2 Mln
Restruct. (3.2 Mln) (5.2 Mln) (17.0 Mln) (34.8 Mln)
Charges
Net Profit (39.8 Mln) (258.3 Mln) (342.7 Mln) (437.0 Mln)
Extra Loss (20.7 Mln) N/A N/A N/A
-Figures in parentheses represent losses
Currency History (peso vs U.S. dollar)
06/30/98 06/30/97 9/30/97 9/30/96
1.0000 1.0000 1.0000 1.0000
-By Camilla Gallagher; 541-313-1918; cgallagher@ap.org |
