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Chilean Billionaire Saieh Raises $300 Million for Distressed SMU

Chilean billionaire Alvaro Saieh completed a $300 million capital increase for his distressed retailer SMU SA after selling stakes in insurance companies to raise the funds.

Saieh has fulfilled his pledge to complete the capital increase by the end of the year, SMU said today in a statement distributed by an external press agency. The company plans to sell a further $200 million of shares by October 2016.

Saieh made his fortune in banking in the 1980s and last year spent $1.3 billion to buy Colombia’s Helm Bank. SMU is his attempt to build Chile’s third-largest retailer by buying a series of small retail chains throughout Chile. The company said in July it had breached terms on its debt after restating earnings to show higher liabilities.

SMU bonds due in 2020 are the best-performing in Bloomberg’s emerging-market corporates index this month after posting Latin America’s worst returns in the first 10 months of the year. The extra yield, or spread, investors demand to buy SMU’s bonds instead of U.S. Treasuries rose six basis points, or 0.06 percentage point, to 16.39 percentage points today. The spread has fallen from a high of 19.82 percentage points on Oct. 29, according to data compiled by Bloomberg.

Inversiones La Construccion SA said on Oct. 1 it would pay $170 million in cash and assume debt for a 67 percent stake in Corp Group Vida Chile SA, the holding company through which Saieh controls two insurers. He also sold 31 bank branches for $83 million to Independencia Rentas Inmobiliarias, a real estate fund that will lease the space back to Corpbanca.

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