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article imagePeruvian pension funds invest in Chilean airline

By Igor I. Solar     Feb 26, 2010 in Business
Santiago - Sebastián Piñera, president-elect of Chile, sold Thursday (25/02/10) 6.4% of his property of LAN Airlines to Administradora de Fondos de Pensiones of Perú.
The transaction worth about US$375 million adds to the sale on Monday 22nd of a third of Piñera’s stakes in LAN airlines to Costa Verde Aeronáutica S.A. (CVA). CVA, a Chilean company controlled by the Cueto family, was already owner of 25.5% of the airline and will finance the purchase of 8.56% of LAN, worth about US$500 million, through bank loans. Ownership of 34.06% of LAN gives the Cueto family complete control over the airline.
Costa Verde Aeronáutica had a preferred option to purchase the whole package of Piñera’s ownership in LAN (26.33%), but declined by acquiring only a fraction of the lot. The latest sale of LAN’s shares allows the Peruvian investors a significant participation in the airline.
LAN was a property of the Estate of Chile until 1985. The airline, based in Santiago de Chile, is one of the main South American carriers. A member of the OneWorld Alliance, LAN flies within Latin America and to destinations in USA, Canada, Europe and Oceania. Currently, the fleet consists of 85 aircraft. The company has subsidiaries in Chile, Argentina, Peru and Ecuador.
The value of LAN airlines shares had increased in recent weeks when the purchase of the remaining participation of Mr. Piñera in LAN by TAM airlines of Brazil was mentioned as a possibility. These transactions are expected to report to Mr. Piñera about 11 million dollars in profits. It has been reported by Chilean media that the cost of Mr. Piñera’s presidential campaign may have been around US$10 million.
Mr. Piñera promised to dispose of his participation in several major enterprises following the presidential election held in Chile in January. This intends to avoid conflict of interest criticisms in connection with his financial interests in the airline and numerous other businesses. On February 16, Mr. Piñera had sold his 9.76 % ownership of Clínica Las Condes, Chile’s most luxurious medical center, a transaction worth about US$ 37 million. He still maintains his property on a TV station (Chilevisión) and a soccer club (Colo Colo). Mr. Piñera consistently rejects any comparison with Mr. Berlusconi of Italy.
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