Business

Seguros Comercial America may be sold to ING

HISPANICVISTA - May 7, 2001 - Mexican conglomerate Savia said on Friday it was in talks with ING Group about selling the Dutch financial giant the rest of its stake in its insurance unit, the largest in Mexico. Savia said in a statement it was in talks to sell ING its remaining participation in Seguros Comercial America, reported Reuters.

ING already owns a 41.5 per cent stake of the insurance unit, which it bought last year for $808.8 million.

The move comes as Savia, whose assets also include a leading fruit and vegetable seed businesses, confronts a liquidity crunch and tries to restructure its debts.

On Thursday, the company announced to the press it had reached an agreement in principle with creditor banks to refinance.

Savia spokesman Jaime Garcia Narro said that, if the sale goes through, Savia would use the proceeds to pay off debt.

Its bank debts as of Dec. 31 were 10.662 billion pesos ($1.15 billion) and its assets were 62.850 billion pesos ($6.79 billion), he said.

"The goal of all of these possible actions that are being analyzed, that are being discussed ... is to reduce our bank debts,'' Garcia told Reuters.

In the ING deal last year, the Dutch giant purchased the option to buy the remaining part of Seguros, which if exercised by ING set a minimum price for the stake of $2.620 billion.

The agreement stated that if Savia decided to sell the stake, the minimum purchase price would be $1.750 billion.

Both figures would require updating to factor in U.S. inflation levels.

Seguros Comercial America has a 27 percent market share in Mexico (and approximately 30 per cent of the tourist auto insurance business) and reported net profits of 95.2 million pesos (about $10 million) in the first quarter of 2001.

Savia also announced in April it would sell the three production units it still holds of its packaging subsidiary EPA

to a Mexican editorial group, for $285 million.