08 July 2009

Enjoy to Sell Shares for 50 Pesos Each in Chile IPO

By Nathan Gill
     July 8 (Bloomberg) -- Enjoy SA, a Chilean casino operator, said it will sell shares for 50 pesos each in the Santiago stock exchange’s first initial public offering this year.
     The company will announce the full amount raised at a ceremony at the exchange today, according to a statement posted on the Web site of the country’s securities regulator last night. The Santiago-based entertainment and hospitality chain with operations in Chile, Argentina and Croatia planned to sell 462 million shares, or a 30 percent stake in the company. The stock is scheduled to begin trading today.
     Enjoy is selling shares after shelving plans last year amid a plunge in the equity market that sent Chile’s main stock index down the most in a decade. The IPO, the country’s first since soccer club owner Azul Azul SA went public in November, may spur more new listings as the market recovers, said Raul Barros, an analyst at FIT Corredores de Bolsa in Santiago.
     “Enjoy’s IPO represents a change in consumer perceptions,” Barros said. “This could be the point of departure for new offerings next year.”
     Chile’s Ipsa index has gained 30 percent this year after the central bank cut its benchmark lending rate 7.5 percentage points to a record low 0.75 percent and the government started spending savings from copper exports to bolster the economy. The gauge tumbled 22 percent in 2008.

‘Stabilization and Recovery’

     “Enjoy’s entry into the local market reflects to a large degree the stabilization and recovery of equity markets,” Jorge Selaive and Trinidad Bone, analysts with BCI Corredor de Bolsa SA, wrote in a June 25 note. “This could create incentives for other companies to list on the exchange as a source of new financing.”
     Azul Azul, owner of soccer club Universidad de Chile, was the Santiago stock exchange’s only IPO last year, and the sale was part of a condition of the company’s concession to run the club. There were two initial listings in 2007.
     Enjoy lost 2.4 billion pesos ($4.4 million) in the first quarter of this year, compared with a 2.7 billion-peso profit a year earlier, according to a report from Larrain Vial Corredora de Bolsa SA, the Santiago-based broker managing the sale.
     Profits declined because of the opening of casinos and the increased costs of servicing the company’s debt, Barros said. He recommended buying shares at a price of up to 48 pesos.
     Enjoy forecasts 2009 earnings before interest, taxes, depreciation and amortization of 27.3 billion pesos, according to the Larrain Vial report.
     Enjoy will use proceeds from the new shares to pay existing debt and finance new projects, the report said.