La Polar Gains in Chile After Return to Ipsa Index
Empresas La Polar SA (NUEVAPOL), the Chilean department-store operator that plunged 91 percent in 2011 after the discovery of accounting irregularities, rallied after returning to the country’s benchmark stock index.
La Polar rose 2.5 percent to 211 pesos at 10:59 a.m. in Santiago, and earlier rose 3.7 percent, the most in three weeks on an intraday basis. The shares are still down 94 percent since peaking in September 2010.
“It’s positive for the stock as there are foreign funds that invest only among members of the index,” Gian Bonino, an analyst at Euroamerica Corredores de Bolsa SA, said in a telephone interview today from Santiago. “La Polar showed up as a new possible member of the Ipsa in our simulations, but it seems to have taken the rest of the market by surprise.”
La Polar revealed in 2011 that previous management had unilaterally been restructuring terms of clients’ past-due loans as a way to cap loss provisions and boost profits. The announcement forced the company to book a loss of 583 billion pesos ($1.2 billion) in 2011 and led to the dismissal and trial of some former managers. La Polar was dropped from the Ipsa index that year.
Current management, led by Chairman Cesar Barros and Chief Executive Officer Patricio Lecaros, restructured terms of $1.1 billion of debt and sold 133 billion pesos in new shares to shore up La Polar’s finances. The company seeks to reach full- year revenue of 462 billion pesos by 2014, Lecaros told reporters in September. The retailer had revenue of 259 billion pesos in the first nine months of 2012, according to data compiled by Bloomberg.
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