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Salfacorp Surges as Stock Selloff Spoils Breakup: Santiago Mover

June 25 (Bloomberg) -- Salfacorp SA, Chile’s largest engineering and construction company, jumped the most in almost six years after its board canceled a plan to separate into two parts amid an emerging-market selloff.

Salfacorp surged 10 percent to 664.46 pesos at the close in Santiago, the biggest increase on a closing basis since September 2007. It was the biggest gainer on Chile’s benchmark Ipsa index, which advanced 0.5 percent.

The board canceled the breakup at a meeting today because of “conditions in global and domestic markets,” according to a regulatory filing. Santiago-based Salfacorp in March had announced a plan to split off its real-estate investment unit from its engineering and construction company. Investors were unnerved by questions on how Salfacorp would allocate its $173 million of bonds outstanding, according to CorpResearch SA.

“If Salfacorp had transferred its bond debt to only one of the units, it could have made it unviable,” Pedro Letelier, an analyst at Santiago-based CorpResearch SA, said in a phone interview. “Now they’ve removed this factor of uncertainty.”

The shares had tumbled 38 percent this year through yesterday, the worst performance on the Ipsa.

Under the company’s breakup plan, investors would have received shares in both units, which would have been separately listed on the Santiago exchange.

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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