Empresas La Polar SA (NUEVAPOL), a Chilean department-store operator, sank to a three-month low after announcing a plan to convert bonds into shares.
La Polar slumped 3 percent to 45.10 pesos at the close in Santiago, the lowest closing price since March 13.
The retailer called a shareholder meeting for July 1 to vote on the sale of convertible bonds to restructure its $394 million of debt and a capital increase to back the conversion of the bonds to shares, it said in a filing posted yesterday on the website of Chile’s securities regulator. It will also call meetings with bondholders for July 2 and July 4 to vote on the amendment of terms.
“The stock is falling because of the new shares coming to the market,” Guillermo Araya, the head of equity research at broker Renta4, said in a telephone interview from Santiago. “Investors are assuming that creditors will be able to convert their bonds to shares at a price a lot lower than the close yesterday.”
The Santiago-based company has struggled to regain investor confidence since admitting to rescheduling customer loans without telling them and lying on financial statements. Its 2011 default came after it said that it had been unilaterally restructuring past-due consumer loans to make them look current, capping loss provisions and boosting profit.
To contact the reporter on this story: Eduardo Thomson in Santiago at firstname.lastname@example.org