LanChile floats once more

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LanChile plans a public flotation of 15-20% of its shares in March or April in an effort to increase its capital and the liquidity of its ownership.

Chile's flag carrier is one of the few publicly traded Latin American airlines, and the only one listed on the New York Stock Exchange. Around 15% of the carrier's shares are now publicly held. Overseas investors own about half of those; the other half are traded within Chile. The remaining 85% is privately held by three Chilean investor groups, including the Cueto family.

"We have been talking with our investors about a new issue, but were awaiting the results of negotiations with our pilots," says Enrique Cueto, the airline's chief executive. Late in November those talks produced a new four-year labour deal, clearing the way to proceed with the public flotation.

At least part of it will be a new issue. Current shareholders have a first right to any new shares. The balance will be offered mostly in New York.

Chile does not limit foreign ownership. So long as the airline is majority owned by a Chilean company, foreigners may own any or all of that company. If present shareholders do not take up the new issue, foreigners ultimately could own up to 28% of LanChile's equity.

The decision to proceed with this offering reflects the confidence of LanChile's senior management in the airline's strength and its market appeal. LanChile's initial public offering of 15% of its shares in 1997 raised about $120 million.