S&P: Entel unaffected

Standard & Poor's said the sale by Telecom Italia SpA (BBB+/stable/--) of its majority equity stake in Entel (BBB+/stable/--), would not have an immediate affect on the ratings or outlook on Entel.

Telecom Italia recently announced that it reached an agreement to sell its majority stake in Entel (54.76%) to Almendral SA a group of local Chilean investors, for $934 million.

S&P said the closing of this transaction will trigger change of control clauses contemplated in certain bank loans (that represent approximately $370 million, or about half of Entel's total estimated consolidated debt as of December 2004), by which banks would have the option to request prepayment of their individual participations in the loans.

There would be no incentives for the banks to ask for the prepayment of their loans in Entel, according to S&P, as the change of control would not involve significant modifications of the company's financial profile and business fundamentals, at least in the short term.

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