Bloomberg News

Salfacorp Rebounds After Denying Covenant Breach: Santiago Mover

March 26, 2012

Salfacorp SA (SALFACOR), Chile’s largest builder, jumped the most in four months in Santiago trading after denying reports that it breached debt covenants.

The stock climbed 4.2 percent to 1,287 pesos at the close in Santiago, the most since Nov. 28 and ending a five-day losing streak.

The company doesn’t face imminent payments of guarantees on building contracts, according to a written response to regulators published after the close of trading March 23. The shares fell 14 percent in the previous five days.

“We’ve contacted the company and they remain calm,” said Alex Sadzawka, an analyst at Celfin Capital SA in Santiago. “If last week’s fall was due to solvency concerns, then it should have happened at the end of the third quarter, when Salfa showed weaker figures than in the fourth quarter.”

Salfacorp had total current liabilities of 236 billion pesos ($492 million) at the end of 2011, from 250 billion pesos at the end of the third quarter, according to data compiled by Bloomberg. The company’s so-called quick ratio -- which gauges short-term liquidity by dividing current liabilities into cash, cash equivalents and account receivables -- rose to 0.97 from 0.91 in the same period.

Celfin has a buy rating on the stock with a year-end price target of 1,980 pesos, Sadzawka said.

To contact the reporter on this story: Eduardo Thomson in Santiago at

To contact the editor responsible for this story: David Papadopoulos at

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