May 13, 2013 / 4:35 PM / in 5 years

Brazil's Gafisa considering Alphaville IPO, may decide this year

SAO PAULO (Reuters) - Gafisa SA (GFSA3.SA) will decide on a possible initial public offering of its high-end Alphaville unit this year, Chief Executive Officer Duílio Calciolari said, a sign the Brazilian homebuilder is broadening its options to raise cash and pay down debt.

Speaking on a conference call with analysts on Monday to discuss first-quarter earnings, Calciolari said the company was “in no hurry” to spin off the unit. Shares spiked last month on media reports that the sale of Alphaville, a deal that could fetch about 2 billion reais for Gafisa, was in an advanced stage.

“All the options are open,” he said, adding “I think we’ll come to a decision on it this year.” Gafisa owns 80 percent of Alphaville and is in arbitration to purchase the rest.

The sale of Alphaville, Gafisa’s most profitable unit, has been touted as part of a turnaround plan spearheaded by Calciolari to arrest a 66 percent plunge in shares since January 2011. The transaction would help Gafisa reduce its debt, which is among the highest in Brazil’s construction sector.

Gafisa booked a worse-than-expected first quarter net loss of 55 million reais ($27.2 million) late Friday, compared with a 31.5 million reais loss a year ago. Much of the loss was due to sales cancellations at its low-cost Tenda unit and mid-range Gafisa division.

While “a significant volume” of cancellations should occur in the second quarter, that number should continue to fall over the quarter and the course of the year, mostly due to a lower number of deliveries and better risk controls, Calciolari said.

    At 12:33 p.m. (1533 GMT) Gafisa shares dropped 5.7 percent to 3.97 reais, representing the biggest percentage decline on Brazil’s benchmark Bovespa stock index.

    ($1 = 2.01 Brazilian reais)

    Reporting by Asher Levine; Editing by Gerald E. McCormick, Guillermo Parra-Bernal and Andrea Ricci

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