Doing the Right Thing
Even if it hurts, Latin American companies recognize the need to look to the equity markets as a way to rebalance capital structures weighed dwon by debt and Brazil is leading the way. The challenge is to drum up investor interest.
Globocabo, Brazil's leading cable company, is facing a stark
choice. It can either restructure its debt or sell out to a
competitor. Its parent company, Organizações
Globo, the overleveraged media group, is also in trouble as the
cost of servicing its dollar-denominated debts rises with the
decline in value of the real. Globo is mulling a R$1 billion
($378 million) public equity offering on the São Paulo
Stock Exchange. Telesp Celular Participações, the
Portuguese-owned cellphone operator, is also overextended and
it too is considering a plan to rebalance its capital structure
through a local equity offering. Latin American companies that
raised dollar financing when there was easy access to the debt
capital markets now are struggling to cope with their debt
burden, and for many, the equity markets are beginning to look
less forbidding than before. "I think the difficulties that
companies in the region have faced in the...
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