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Lower Price Expected for AOL Latin America

August 01, 2000|Bloomberg News

America Online Latin America Inc. may trim the price of its public share sale to persuade investors to buy a stock that combines the volatility of the Internet with the risks of emerging markets.

The company, a unit of America Online Inc., had been planning to raise as much as $425 million from investors Monday night. The underwriters now say the sale won't come until today at the earliest.

"I don't know anyone who is going to do the deal at this price," said Francois Gour, a hedge-fund manager at Waterford Partners. "They've tested the waters and found out they're pretty cold."

AOL Latin America's offering (proposed ticker symbol: AOLA) already is 26% lower than a planned initial public offering it announced in January. That sale was postponed amid market volatility that made Latin American technology stocks particularly hard to sell to investors.

AOL Latin America, which lost $53.1 million from December 1998 through March, wants to raise cash as it spends to attract and keep subscribers in Brazil and as it pushes into Mexico and Argentina. The company first offered service in Brazil last year. It opened in Mexico recently.

Considering the punishing that Latin American Internet shares have taken since April, many investors say that the $4-billion target valuation placed on AOL Latin America is too high. That could prompt the company to reset the price in its offering as low as $10 to $12 a share, from the original target of $17, observers said.

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