Buenos Aires, Argentina -- The resignation of CEI Citicorp
Holdings S.A. president Richard Handley, who steered the company to a dominant position in
the Argentine media business, reflects a shift in the balance of forces within CEI,
according to observers.
Handley's departure was announced at a press
conference Sept. 3. Also in attendance were local banker Raul Moneta, the new president of
CEI; and Thomas Hicks, chairman and CEO of private-investment fund and CEI shareholder
Hicks, Muse, Tate & Furst Inc., who becomes vice chairman of the conglomerate.
Handley, who remains as a board director and advisor to the
company, attributed his resignation to personal reasons. He denied having significant
differences with Moneta and Hicks regarding the future strategy of CEI, and he said he
will continue attending CEI meetings as often as required. Handley's term as
president will end in December.
Although Handley's departure is not a surprise, people
familiar with the situation attributed the change to the new balance of forces at CEI.
U.S.-based Citicorp, which once owned 40 percent of CEI, is
now its third-largest shareholder, with some 23 percent. Moneta's Banco Republica is
the largest single shareholder, with 39.59 percent, while Hicks, Muse has some 32.68
percent. The remainder -- less than 5 percent -- floats in the Buenos Aires Stock
Although loans came from various sources, Handley's
close ties to Citicorp -- he is a former employee of the bank and a friend of its CEO,
John Reed -- were useful to CEI.
In the future, CEI may rely more on funding provided by
Hicks, Muse. The Dallas-based company has already invested more than $700 million for its
current stake in CEI, and it might acquire part of the equity that Citicorp still holds.
It is understood that Citicorp must divest completely by 2002.
CEI is partnered with Spanish telco Telefónica de España
Internacional S.A. (TISA) in Telefónica de Argentina S.A., the telco that holds a
monopoly over roughly one-half of Argentina.
It is also an investor in Cablevisión/TCI2, the
second-largest cable-TV MSO in the country, with 1.45 million subscribers. Other
Cablevisión shareholders include TISA and Tele-Communications International Inc. (TINTA).
Additionally, CEI, TISA and TINTA are shareholders in
sports programmer Torneos y Competencias S.A., while CEI has independent investments
extending into publishing, broadcast TV and radio.
Hicks said he continues to support ventures in Argentina,
and his company is seeking investments in other industries, such as food, manufacturing
and energy. All investments in media will continue to be funneled through CEI.
"Argentina has been treated unfairly by the
international investors; they do not differentiate it from Korea or Russia. We do, and
that's why we believe that there are very good perspectives here. Our investments are
long-term, from five to 10 years," Hicks said.
Outside of Argentina, CEI said it has spoken with Grupo
Abril head Roberto Civita about joint-venturing in Brazil, but nothing has been decided.
Handley denied having received an offer to work with Civita in Brazil.
TISA was offered a small percentage of CEI, but it decided
not to acquire it, considering that it would not wield any influence, according to people
who follow the industry.