Alfa SAB’s bond investors are in a forgiving mood.
The company is enduring growing losses from its stake in Colombia oil driller Pacific Exploration & Production Corp., which has missed interest payments on its debt and seen its stock plummet. At last check, the maker of everything from car parts to cold cuts has lost $872 million since acquiring a 19 percent stake in the crude producer that it also unsuccessfully tried to take over last year.
Yet, instead of dwelling on its failure in the oil industry, Alfa’s bondholders are backing the company’s expansion into Mexico’s telecommunications market. Its $1 billion of notes have returned 8.6 percent since Alfa completed its purchase of Axtel SAB on Feb. 15., almost double the average gain in emerging markets. The merger of Alfa’s Alestra unit with Axtel allows the companies to take advantage of new laws that are seeking to boost competition in a market long dominated by billionaire Carlos Slim’s America Movil SAB.
“The merger is very attractive,” said David Neuhauser, managing director of Livermore Partners Inc., which oversees $100 million in global equity and debt, including Alfa bonds. “It’s a positive for their bonds and helps create another growth avenue for this company.”
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