Brazilian pay television company Net Servicos de Comunicacao said on Wednesday it would issue 1.8 billion shares in a private placement to raise funds to restructure some 1.3 billion reais in debt.

Hoping to speed up the deal and pay back its creditors, Net said it had opted to issue the 745 million ordinary voting shares and 1.1 billion nonvoting preferred shares privately, instead of through a public issue.The stock will be sold at 0.35 reais per share.

"Our objective is to carry out a quick operation," said Net's director of investor relations, Leonardo Pereira. "We would like to have a balance sheet on December 31 with this restructuring behind us."

The company hopes to have a final accord with its creditors signed by Nov. 30 and the restructuring of its debt could occur as soon as the share placement is concluded, Pereira said.Net's current shareholders will have first rights to subscribe the shares.

The BNDESPar, the investment arm of Brazil's BNDES national development bank that is a shareholder in Net, agreed to guarantee the share offer for the private placement at 0.35 reais, avoiding the process of bookbuilding, which would determine the price by demand.

The remaining stock not subscribed by the BNDESPar and other shareholders in the private placement will be issued on the stock exchange at a priced determined by a bookbuilding, Net said.

As part of the deal, Net's main shareholder, media conglomerate Globopar, will transfer its right to subscribe 20 percent of the new preferred shares to Mexican telecommunications group Telefonos de Mexico.

That would mean Telmex would buy at least 70 million reais worth of preferred shares, although it could buy more if other shareholders do not participate in the deal.

The deal will give Telmex a stake in Net as it makes a drive into the Brazilian market, where it recently bought long-distance operator Embratel Participacoes) .

Under a separate deal, Telmex is setting up a new holding company with Globopar that will hold the majority of Net's voting shares.The company's shares closed up 1.82 percent at 0.56 reais on Wednesday, before Net made its announcement.

(From Reuters, November 04, 2004)

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