Reuters: Global Markets: Planned Carrefour Colombia buy sends Cencosud shares tumbling

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Planned Carrefour Colombia buy sends Cencosud shares tumbling Oct 19th 2012, 16:38 By Anthony Esposito SANTIAGO | Fri Oct 19, 2012 12:38pm EDT SANTIAGO (Reuters) - Cencosud SA CEN.SN said on Friday it will propose a $1.5 billion capital increase and issue $1 billion in bonds on the U.S. market to help repay a loan it signed for the purchase of French retailer Carrefour's Colombian assets, sending shares plunging. The Chilean retailer announced on Thursday it had signed a $2.5 billion loan agreement with JP Morgan Chase Bank to finance its $2.6 billion purchase in Colombia, which would be the biggest by a Chilean firm abroad to date. Cencosud shares shed nearly 7 percent on Friday morning, extending earlier losses as analysts questioned the Colombia purchase's pricetag and the operation's potentially long turnaround time. They later trimmed losses to shed around 5.88 percent in midday trade. "I hope that in the short-term rather than in the long-term, the market will recognize that investing in Colombia and buying this asset was a good decision," CEO Daniel Rodriguez said at a news conference. "The advantage that arriving via the supermarket business... gives you is scale. That allows you to develop another format without having to make an acquisition." Cencosud aims to propose the capital increase to shareholders in Chile and the United States within the next 120 days and issue the 10-year bonds within the next 90 days. The firm has raised more than $1 billion this year to fund expansion across South America and repay debt. Cencosud, which listed on the New York Stock Exchange earlier this year, recently acquired Brazilian supermarket chain Prezunic and Chilean department store Johnson's, and also has operations in Argentina and Peru. The retailer added it hoped the shareholders meeting would be held around November 20. (Reporting by Anthony Esposito writing by Alexandra Ulmer; editing by Matthew Lewis) Link this Share this Digg this Email Reprints

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