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To: NYBellBoy who wrote (221)	4/27/1998 3:15:00 PM
From: Bellvie	Read Replies (1) \| Respond to of 6531

Bellboy, RE: TBR NEW YORK, April 21 (Reuters) - The break-up of Brazilian state telephone company Telebras SA <TBR.N> <TEL.SA> would spark the biggest creation of American Depositary Receipts (ADRs) ever, a senior New York Stock Exchange official said. Georges Ugeux, head of the exchange's international operations, said the split of Telebras into 12 new companies as a prelude to privatization would mean each Telebras ADR will be replaced by 12 new ADRs representing the new companies. Since Telebras has about 90 million ADRs outstanding, "it's the creation of a billion ADRs at one shot," he told Reuters in a recent interview. "It would be the greatest creation of ADRs ever." "That's beyond anything we've seen," he said. At Tuesday's price of 126-9/16, Telebras ADRs are worth around $11.4 billion. Ugeux said the Telebras ADRs would not represent issuance of new stock. "It's almost like a gigantic spin-off, and spin-offs happen all the time." He said the exchange was still discussing the sale and break-up with Telebras and Brazilian officials, both in New York and Brasilia. In another step towards privatization, Telebras' board last week called a stockholders' meeting for Friday to approve the formal break-up into 12 parts. Ugeux, who visited Brazil last week, called the effort "a work in progress." Telebras, a bellwether Latin American ADR, is the most heavily traded foreign issue on the New York Stock Exchange. Its privatization is scheduled for mid-year and will be the biggest state sell-off in Latin American history. Brazil's reformist government plans to split Telebras into eight cellular telephone firms, three fixed-line holding companies and a long-distance carrier ahead of its sale. Investors and analysts have expressed concern that some of the 12 new companies would not meet Securities and Exchange Commission and exchange requirements for listings. Also, they fear that some of the new issues, such as those in remote or poorer areas, could be hard to trade because they would not be as popular as ADRs for companies in industrialized regions. "It is going to be a complex process and the various companies are going to have to find their levels," Ugeux said. "It is rather like the (1980s) break-up of AT&T (Corp.) <T.N> and the Baby Bells. We have some precedents there and we know how to do it." He noted that even smaller companies could have market capitalizations of several hundred million dollars. The shares will be fully registered with the Securities and Exchange Commission and are expected to trade on the New York Stock Exchange, Ugeux said. ADRs allow U.S. trade of foreign shares. Telebras ADRs represent one lot of 1,000 preferred shares <TEL-p.SA> traded in Sao Paulo, where they are the benchmark issue.