Chile Pension Funds to Reject Telefonica Offer - Paper

SANTIAGO -(Dow Jones)- Chilean private pension fund managers have agreed to reject an offer from Spain's Telefonica to buy their equity stakes in its local Compania de Telecomunicaciones de Chile (CTC) unit, local newspaper El Diario Financiero reported Tuesday, citing pension funds sources.

The newspaper said the managers, also known as AFPs, will likely announce their rejection, and expectations of an improved offer, next week after the boards of the AFPs meet to discuss the offer.

AFP executives weren't immediately available to comment. In early September, Telefonica SA announced a $1 billion cash offer for the 55.1% stake in CTC shares it doesn't already control. It's offering 1,000 pesos ($1.82) for each A-series share and CLP900 for each B-series share.

The funds have a 20.8% stake in the Telefonica CTC Chile.

Despite Telefonica having publicly stated that it won't sweeten its offer, analysts said the AFPs' move might force its hand.

"The probability that Telefonica will increase its initial offer has risen, so we recommend current shareholders for wait for the final resolution between these entities before taking a definitive position," local brokerage Banchile said Tuesday.

CTC shareholders will vote at a Oct. 7 shareholders meeting whether to modify the telecom's bylaws in order to allow the Spanish telecom to increase its stake to over 45%. Telefonica set an Oct. 16 deadline for shareholders to accept the offer.

At 1630 GMT, CTC A-series local shares were down 0.4% at CLP930.00, while its ADR rose 3.4% at $6.73.

The benchmark Ipsa index was up 2.7% at 2,701.68 points from Monday's close. In the past 52 weeks, CTC's ADRs have traded between a low of $5.27 and a high of $10.16.

-By Patricia San Juan, Dow Jones Newswires; 56-2-820-4241; patty.sanjuan@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 30th September 2008