* Pinera to offer 3.3 pct LAN stake in market
* Chile's Bethia group to buy remaining 8 pct stake
* Market sees no major changes to airline after sale
(Updates with Cueto family holding in loan ahead of sale in
By Juan Jose Lagorio
SANTIAGO, March 24 Chilean President Sebastian
Pinera agreed to sell his remaining stake in airline LAN
LAN.SN (LFL.N), worth around $621 million, in the market and
to Chile's Bethia group, as he moves to counter growing
criticism over a possible conflict of interests.
Pinera, a center-right businessman, had promised to unwind
his majority stake in the regional airline before his swearing
in earlier this month. A Feb. 27 earthquake delayed
negotiations, sources said, pushing back the sale and
triggering much criticism from the opposition and even some
allies in Congress.
Pinera's holding company, Axxion SA AXX.SN, said in a
regulatory statement it will on Thursday auction a block of
11.31 million LAN shares in the market for a starting price of
9,099.58 pesos per share, equivalent to 3 percent of LAN.
With Chile's peso closing at 533.20/533.50 pesos per dollar
on Wednesday, the starting price is around $193 million.
The holding company of the Cueto family, now the majority
stakeholders in LAN, said on Wednesday evening it had extended
a $225 million short-term loan to its own investment arm on the
eve of the auction of the 3 percent LAN stake.
The Cueto family's holding company, Costa Verde
Aeronautica, did not say what the 5-day loan was for.
Pinera's holding company, Santa Cecilia, has agreed to sell
its 99.84 percent stake in Axxion, which holds a further 8.3
percent stake in LAN, to the Chilean group Bethia SA, which
holds investments in top retailer Falabella FAL.SN.
Axxion holds Pinera's stake in LAN, which means its sale
will effectively unwind his participation in the carrier.
Shares of Axxion fell 4.41 percent to 18 pesos on
Wednesday. Axxion and LAN shares were temporarily suspended in
the morning by the local bourse as it waited for Axxion to file
a regulatory statement over the sale.
Celfin Capital, the investment bank Pinera had hired to
carry out his LAN stake sale, said the public offering plus the
Axxion deal would finalize the LAN stake sale.
Analysts say they expect few changes to one of Latin
America's biggest airlines following the sale.
"Bethia is likely to be a shareholder that will not get
involved in the company's operations, but it will be more of a
passive shareholder," said Cristina Acle at CorpResearch.
"That means that LAN will continue to be controlled by the
The Bethia group holds investments in businesses that range
from agriculture to retail and food products.
"They were not particularly in the sector or were related
to the airspace industry," said Claudio Gonzalez, head of
research at Tanner brokerage. "In that sense (the sale) was a
Local media said foreign investors were interested in
buying Pinera's remaining shares in LAN.
LAN Vice-President Enrique Cueto said the entry of the
Bethia group "means no changes for the airline."
Pinera, who started to divest his LAN stake worth around
$1.5 billion in February, had been under growing pressure to
finish the sale.
His government has to face a multibillion dollar
reconstruction in the wake of the one of the strongest
earthquakes ever recorded. The 8.8-magnitude quake and ensuing
tsunamis killed hundreds and demolished towns and roads in
He would need support in a divided Congress to speed up
rebuilding, which is seen as crucial for his new government
after 20 years of center-left rule.
LAN, which is considered one of Latin America's most
profitable airlines, signed a contract in December to buy 30
new Airbus A320 short-haul aircraft worth around $1.97 billion
as part of a program to renew its fleet.
The company's net profits tumbled 31 percent in 2009 to
$231.1 million amid the worst of the global financial crisis,
but saw profits increase in the fourth quarter in what experts
say is a sign of recovery in the airline industry.
Shares of LAN rose 0.41 percent to 9,255 pesos.
($1= 533 Chilean pesos)
(Additional reporting by Antonio de la Jara and Alvaro Tapia;
Editing by Simon Gardner and Richard Chang)