Maxcom Telecomunicaciones SAB bonds surged the most in more than two years after it agreed yesterday to a 764 million-peso ($59 million) takeover by Ventura Capital Privado SA, which vowed to add capital to compete against billionaire Carlos Slim in Mexico.
The price for the phone company’s $200 million in notes due in 2014 climbed 5.09 cents to 63.60 cents on the dollar at 12:47 p.m. in Mexico City, according to data compiled by Bloomberg. It’s the biggest price increase on a closing basis since Aug. 12, 2010. The securities had slumped since being issued in November 2007 as the Mexico City-based company struggled to compete with larger rivals in Mexico’s phone and Internet markets.
Ventura, a private-equity firm, offered 2.90 pesos a share for Maxcom, according to a U.S. regulatory filing yesterday. Maxcom said its board and investors representing 44 percent of outstanding stock have approved the deal. Maxcom, which offers phone, Internet and television service in several Mexican cities, has struggled to compete against Slim’s America Movil SAB, which controls 80 percent of the nation’s landline phone subscriptions.
“Maxcom has significant potential to continue growing and gaining market share in Mexico,” Ventura said in a statement yesterday. “With a stronger balance sheet as a result of the potential debt exchange and capitalization, we plan to position the company as a leading niche telecommunications provider in the country.”
Years of Losses
Maxcom, which has reported a net loss in each of the past four years, said net income rose to 44 million pesos in the third quarter on revenue of 565 million pesos. The company posted a net loss of 239 million pesos in the second quarter.
The company has about 366,000 landlines, compared with 14.4 million for America Movil’s Telefonos de Mexico unit. Manuel Perez, Maxcom’s investor relations director, declined to comment, and representatives of Ventura Capital couldn’t be reached.
The offer was 20 percent lower than yesterday’s close of 3.62 pesos, and the stock fell as much as 18 percent today in Mexico City, the biggest intraday percentage decline since Oct. 23, 2008. Maxcom tumbled 16.3 percent to 3.03 pesos after dropping to as low as 2.96 pesos in intraday trading at 12:47 p.m. in Mexico City.
While the offer price is a discount to yesterday’s close, Maxcom’s value had been inflated because of speculation a takeover would occur, according to Alejandro Gallostra, an analyst at Banco Bilbao Vizcaya Argentaria SA. He had calculated the company’s takeover value at 3.1 pesos a share.
Ventura will start a public tender for Maxcom’s shares, and 50 percent of the stock must be offered for the transaction to proceed. The deal is also dependent on a successful offer to exchange Maxcom’s $200 million in 11 percent notes due in 2014 for new bonds the company plans to issue.
While the new capital may help persuade bondholders to renegotiate debt, it will be hard to use the money both to substantially reduce interest payments and increase network investments, Gallostra said yesterday in a phone interview from Mexico City. Both would be needed to improve Maxcom’s prospects, he said.
Ventura’s plan to increase Mexico City-based Maxcom’s capital by $22 million as part of the transaction may not be enough, said Gallostra.
“It remains pretty complicated,” he said . “I’m not sure how they’re going to turn the company around.”