Venezuela to take full control of CANTV

Venezuela will take full control of the country's largest phone company, CANTV, by June 4, and delist it from the New York Stock Exchange, the country's top telecom official said Tuesday.

The government on Monday launched an offer ending May 8 to purchase outstanding shares in CA Nacional Telefonos de Venezuela, through which it plans to obtain at least a 70 percent stake in the company.

It will have full, operational control of the company _ following payments and share transfers _ by June 4 when it will install a new management, including a new president, Telecommunications Minister Jesse Chacon told a news conference Tuesday.

During the process, the government also plans to buy up all of CANTV's remaining American Depository Receipts, Chacon said.

"The intention is to delist CANTV from the New York Stock Exchange," he said.

Removing CANTV from the NYSE will eliminate a key method Venezuelans have used to skirt currency exchange controls. Venezuelans often buy local CANTV shares and later convert them into ADRs that can be sold for U.S. dollars to bypass strict currency restrictions. Venezuelans also buy dollar-denominated bonds to skirt the currency controls.

The state is offering to pay $2.12 per share to shareholders of CANTV. Including a planned dividend payment, the final price would come to $2.55.

In Tuesday trading, CANTV closed on the Caracas Stock Exchange at the equivalent of $3.03 per share, up 0.8 percent. It had fallen more than 18 percent Monday amid jitters over the government's tender offer, before trading of the stock was temporarily halted.

Investors have been willing to pay a premium for CANTV's local shares, more than the government's offer, in order to convert them to ADRs and obtain dollars while they still can.

But with the May 8 deadline for the tender offer now looming, investors have a limited time to process foreign exchange transactions, so the stock price is expected to fall in line with the state's offer.

The government is offering about $14.85 per ADR. On Wall Street Tuesday, CANTV shares closed up nearly 3.2 percent at $14.42.

Venezuela signed a $572 million agreement with New York-based Verizon Communications Inc. in February to purchase its 28.5 percent stake for $2.55 a share _ the same price it is currently offering on the market.

Other CANTV shareholders include Spain's Telefonica SA, which holds 6.9 percent. Workers hold 11.7 percent and the government 6.5 percent. The company, which was privatized in 1991, also has about 43,000 small shareholders.

Chacon also said the government will invest roughly $500 million and expand services over the next few years. The plan is for workers to hold a certain amount of the stock, and to sell other shares to investors in Venezuela.