Chile’s SMU Dollar Debt Falls on Increased Liabilities

Dollar bonds of SMU SA, the Chilean retailer that has breached debt covenants, fell for a sixth day after the company said it understated an increase in total liabilities by almost twice the amount previously estimated.

The yields on SMU’s dollar bonds due in 2020 rose 19 basis points, or 0.18 percentage point, to a record 15.78 percent at 1:01 p.m. in Santiago, according to data compiled by Bloomberg. The price fell 0.58 cent to 68.23 cents on the dollar.

SMU, a supermarket operator controlled by billionaire Alvaro Saieh, said in an Aug. 23 regulatory filing that a review of its first-quarter earnings report had uncovered mistakes in the way it accounted for store lease contracts, resulting in an increase of $151 million in total financial liabilities. That compares with an estimate of $76 million the the company gave on July 11.

SMU had total liabilities of 1.6 trillion pesos ($3.1 billion) at the end of the first quarter, according to data compiled by Bloomberg. The company plans to sell $600 million in shares and sell assets to pay down debt and finance expansion plans, according to regulatory filings.

To contact the reporter on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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