Chile’s Saieh Says No Money From Corpbanca Sale to Go to SMU

Chilean billionaire Alvaro Saieh says he won’t use any money raised from a possible sale of a stake in Corpbanca to fund sister company SMU SA.

“None of the resources received will go to SMU,” Saieh said yesterday in an e-mailed statement sent to Bloomberg News.

Saieh, 64, fulfilled his pledge to inject $300 million into retailer SMU last month. That’s enough to fund its next stage of development, according to the board of directors, he said. The company has also filed to sell 111 billion Chilean pesos ($209 million) in new shares. The plans to raise new capital came after the unprofitable company said in July it breached covenants on its debt.

Saieh also denied in yesterday’s statement that he had hired Goldman Sachs Group Inc. to find a buyer for Corpbanca. Goldman was contracted to analyze merger offers that the bank had already received, not look for new ones, he said, adding that any agreement may not include a cash payment.

Corpbanca shares have rallied 46 percent in Santiago trading since the end of August amid reports that banks including Itau Unibanco Holding SA (ITUB4) and Spain’s Banco Bilbao Vizcaya Argentaria SA (BBVA) were in talks to buy a stake. The shares had previously fallen so much that one of Saieh’s holding companies, Corp Group Banking SA, said the value of its assets, mostly Corpbanca shares, fell in the third quarter to a level that barred it taking on new debt.

Expanding Abroad

The Colombian-born businessman, who together with his family holds 76 percent of Corpbanca, wants to expand his operations internationally, he said. In the past two years he spent $2.5 billion buying banking operations in Colombia.

“Corpbanca has a strategic business plan which includes a plan for the internationalization of its business,” Saieh said. “This is why we have agreed to receive proposals which have given way to the conversations that are publicly known.”

The bank has decided to only pursue those offers that will aid its expansion abroad, Saieh said.

On Nov. 29 Corpbanca confirmed in a statement to regulators that it had hired investment banks to assess a possible merger with foreign or local banks.

The extra yield, or spread, investors demand to buy SMU’s 7.75 percent bonds due in 2020 instead of U.S. Treasuries fell to 15.28 percentage points on Dec. 9 from 19.82 percentage points on Oct. 29. The spread rose 0.17 percentage point yesterday and a further 0.21 percentage point today. The bonds have lost 30 percent this year, the worst-perfoming Chilean bonds in dollars.

The spread on Corpbanca’s bonds due in 2018 fell to 3.13 percentage points on Dec. 5 from 5.00 percentage points on Aug. 29. It has since risen to 3.44 percentage points. The bonds are the best-performing in Bloomberg’s investment-grade emerging-market corporate index in the month through Dec. 10 with a total return of 3.6 percent.

Moody’s Investors Service on Dec. 6 cut its rating on Corpbanca bonds to Baa3, the lowest investment grade, from Baa2.

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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