Telefonica Brasil to Raise $4.9 Billion to Fund GVT Acquisition

Telefonica Brasil SA filed to sell about

15.8 billion reais ($4.9 billion) in new stock to help fund its purchase of Brazilian broadband provider GVT.

The Brazilian carrier, controlled by Spain’s Telefonica SA, will sell 113 million common shares and 220 million preferred shares, according to a regulatory filing on Thursday in Sao Paulo. Madrid-based Telefonica said it will hold a capital increase of its own, selling 3.05 billion euros ($3.4 billion) of new stock to subscribe to the Brazilian unit’s sale.

Telefonica is working on completing the purchase of GVT for about $9 billion from France’s Vivendi SA, with the deal receiving clearance from Brazil’s antitrust agency Wednesday. The takeover is part of a push to expand in Latin America, a region that already accounts for half of Telefonica’s revenue.

The Spanish company will sell about 281 million shares for

10.84 euros each, a 20 percent discount to Wednesday’s closing price, according to a regulatory filing. Existing shareholders will have the right to buy the stock first before other potential investors.

Telefonica Brasil said the price of the preferential shares it’s selling will be set after the bookbuilding is completed and the ordinary shares’ price will be set in accordance to the value of the preferentials.

Telefonica shares declined 1.2 percent to 13.36 euros at 2:47 p.m. in Madrid trading. Telefonica Brasil fell 0.4 percent to 50.38 reais in Sao Paulo.

Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, CaixaBank SA, JPMorgan Chase & Co., Morgan Stanley and UBS Group AG are joint global coordinators of the Telefonica sale.

Santander, Morgan Stanley and JPMorgan joined Banco Itau BBA SA, Banco BTG Pactual SA, Banco Bradesco SA, Goldman Sachs Group Inc., Bank of America Corp., Credit Suisse Group AG and HSBC Holdings Plc as coordinators of the Telefonica Brasil deal.