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Verizon agrees to sell Caribbean, Latin American operations

By wire services
Published April 4, 2006

Verizon Communications Inc. said Monday that it has agreed to sell its Caribbean and Latin American telecommunications operations, including a stake in the largest telephone company in Venezuela, to two Mexican companies for $3.7-billion.

Verizon is selling Verizon Dominicana in the Dominican Republic and its 52 percent interest in Telecomunicaciones de Puerto Rico Inc. to America Movil SA, Latin America's largest cell phone company.

Verizon agreed to sell its 29 percent stake in Compania Anonima Nacional Telefonos de Venezuela, or CANTV, the country's incumbent phone company, to a unit jointly owned by America Movil and its former parent, Telefonos de Mexico SA.

Telmex and America Movil are controlled by Carlos Slim, Latin America's wealthiest man.

Verizon chairman and chief executive Ivan Seidenberg said the businesses "represent a small part of our revenue base that is less aligned with our core business focus and future growth."

Christopher King, analyst at Stifel Nicolaus in Baltimore, said the sales were consistent with Verizon's strategy of cleaning up its balance sheet to free up money for a build-out of fiber-optic connections to subscriber homes in the United States.

The deal was probably not "hugely material" to Verizon, King said, and will probably bring its net debt level down by less than 10 percent.

Verizon shares rose 36 cents, or 1.1 percent, to end at $34.42 on the NYSE.

Tampa's Shells Seafood Restaurants Inc. said it will restate its second and third quarter fiscal 2005 financial statements to reflect an accounting adjustment related to a private placement in May.

For the fiscal year ended Jan. 1, the pro-forma net loss attributed to common shareholders will increase to $3.6-million or a 24-cent loss per share, from the previously reported $1.9-million or 13-cent loss per share. The company manages and operates 25 Shells Seafood restaurants in Florida.

A federal judge on Monday sentenced former Westar Energy Inc. CEO David Wittig to 18 years in prison for looting millions from the Kansas utility.

U.S. District Judge Julie Robinson sentenced Wittig's co-defendant, Douglas Lake, former executive vice president of Westar, to 15 years in prison. Wittig and Lake were ordered to pay fines of $5-million each, in addition to millions of dollars in restitution.

Wittig, Westar's former president, chairman and chief executive, and Lake were found guilty Sept. 12 of conspiracy, wire fraud, money laundering and circumventing internal controls during their tenures at Topeka-based Westar, Kansas' largest electric utility.

Wittig, 50, was convicted of 39 counts. Lake, 55, was convicted of 30 counts and acquitted of nine.

Prosecutors said the men, who were forced out of Westar in late 2002, engaged in several schemes aimed at inflating their compensation and hiding it from the company's board of directors and shareholders.

The U.S. Probation Office had recommended life in prison for both men, but attorneys for both defendants argued that their clients' crimes were not serious enough to warrant that sentence.

Manufacturing expanded in March but at a slower rate, and February construction spending rose to a record level, together signaling continued strength in the overall economy despite some evidence of inflation.

The Institute for Supply Management said Monday that its manufacturing index registered 55.2 last month, compared with 56.7 in February. Readings above 50 indicate the sector is expanding, and those below 50 indicate manufacturing activity is shrinking. Economists had projected a reading of 57.7.

And the government reported Monday that construction spending rose to a record level in February as home building hit an all-time high. The 0.8 percent increase to a seasonally adjusted annual rate of $1.185-trillion came despite a weakening in home sales. That topped the 0.5 percent increase expected by analysts and signals that building will likely continue to fuel economic growth through the year as strong commercial building activity makes up for the slowing housing market.

Taken together, the fresh data are "certainly consistent with an economy growing at a good pace, maybe something at or slightly above the long-term average ... but with inflationary pressure maybe starting to bubble up," said Patrick Fearon, senior economist with A.G. Edwards & Sons Inc. in St. Louis.

The average retail price of gasoline jumped 9 cents last week to $2.59 a gallon.

The federal Energy Information Administration said Monday that U.S. motorists paid $2.588 a gallon on average for regular grade last week, an increase of nine cents from the previous week. Pump prices are 37.1 cents higher than a year ago.

Average retail gasoline prices peaked at $3.07 a gallon in September, a reflection of the extreme tightness in the market after Hurricane Katrina, which knocked out refineries in the gulf region, as well as pipelines that deliver fuel to the East Coast and Midwest.

[Last modified April 4, 2006, 03:00:35]