June 9 (Bloomberg) -- Telefonica SA, Spain’s biggest phone company, is seeking about 1 billion euros ($1.2 billion) from a sale of its call-center unit to help reduce debt, said three people familiar with the matter.
Bain Capital Partners LLC is among potential bidders for the division, called Atento Inversiones & Teleservicios SAU, said two of the people, asking not to be identified because the talks are private. Binding bids are expected by the end of this month and Telefonica may decide on a buyer by August, said two of the people.
Telefonica Chief Executive Officer Cesar Alierta had tried to sell Atento as early as in 2007, and a year ago shelved plans for an initial public offering of the unit. With about 156,000 employees, about half of the Madrid-company’s total, Atento generated 1.8 billion euros in 2011 revenue, compared with 62.8 billion euros reported by the parent company.
“It will be hard for Telefonica to sell Atento at an excellent price after its failed IPO and because of market conditions,” said Peter Braendle, who helps manage about $60 billion at Zurich-based Swisscanto Asset Management including Telefonica shares. “The company will have to continue to deleverage.”
Representatives at Madrid-based Telefonica and Bain Capital declined to comment.
Telefonica, with net debt of 57.1 billion euros at the end of March, has an internal goal to cut its debt by a range of 6 billion euros to 8 billion euros this year, a person familiar with the matter said this month.
Standard & Poor’s cut the former phone monopoly’s rating on May 24 to BBB, or two steps above junk status. Fitch Ratings, which ranks the debt a level higher at BBB+, today lowered its outlook to negative, suggesting it may cut its rating.
Angel Vila, Telefonica’s finance chief, said on May 11 that the sale of Atento was “progressing very positively,” and would be among biggest asset disposals that will raise at least 1.5 billion euros in total. Since then, Telefonica has announced plans to carve out its German and Latin American assets in separate listings. Telefonica is also evaluating options that include a possible merger of its O2 division in Germany with Royal KPN NV’s E-Plus, people with knowledge of the matter said last week.
Telefonica shares rose 3.7 percent to 9.79 euros in Madrid yesterday. The stock has declined 27 percent this year, giving the operator a market value of 44.5 billion euros.
Morgan Stanley and HSBC Holdings Plc are managing the sale.
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