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LiLAC Wilts in Market Debut

Liberty Global debuted its Latin American tracking stock on July 2 to mixed results, with shares of the company – officially called Liberty Latin America and Caribbean Group (LiLAC) – dipping more than 10% in early trading.

Liberty Global announced plans to spin off its Latin America assets – including its 100% interests in Chilean-based VTR GlobalCom SpA and VTR Wireless SpA and its 60% interest in Liberty Cablevision of Puerto Rico LLC – back in October as a way to unlock the value of those assets. The stock, traded over the NASDAQ Exchange under the symbol “LILA,” opened at $56.10 per share but later lost ground, trading as low as $44.01 each early in the day (down  21.6% from its opening and 27% from the $60 price at the close of its last day of when-issued trading). The stock closed on July 2 at $49.61 per share, down 11.6% ($6.49) from its opening price.

The tax-free exchange involved Liberty Global shareholders receiving one LiLAC share for every 20 Liberty Global shares they own. Liberty Global said it distributed about 12.6 million LiLAC shares.

“The launch of our LiLAC tracking stock is an exciting event, which we believe will enhance long-term equity value for shareholders,” said Liberty Global CEO Mike Fries in a statement. “Our cable operations in Chile and Puerto Rico are two of the most advanced platforms in the region. Both businesses have consistently delivered strong financial results and should continue to generate mid- to high-single-digit rebased OCF growth going forward. LiLAC is also uniquely positioned to exploit the highly fragmented landscape characterized by low broadband and pay TV penetrations.”

LiLAC is the second new cable stock to debut in as many days. On July 1, Cable One, the Phoenix-based cale operator, was spun off from former parent Graham Holdings. It too had a mixed day, opening at $450.48 per share but falling in later trading to close at $399 each. The stock was up slightly to $401 each in early trading July 2, before closing at $399.71 per share.