Cencosud to Operate Financial Services Business in Chile through Banco Paris

-- Board of Directors approves incorporation of special purpose vehicle as subsidiary of Banco Paris following end of discussions with Itau Unibanco

-- Financial Services business in Argentina will continue to operate under the current model

News provided by

Cencosud S.A.

Dec 23, 2013, 05:03 ET

SANTIAGO, Chile, Dec. 23, 2013 /PRNewswire/ -- Cencosud (NYSE: CNCO, BCS: CENCOSUD) announced today that its Board of Directors has approved the use of a special purpose vehicle (SPV) under the auspices of Banco Paris (Chile) to manage the Company's Financial Services business in Chile.

The Company expects that the use of the SPV will yield meaningful synergies in the cost of funding for its financial services business in Chile.

Chile's Superintendencia de Bancos (SBIF) approved the creation of an SPV in March 2013.

TERMINATION OF AGREEMENT WITH ITAU UNIBANCO

The decision to implement this new business model was reached as negotiations with Itau Unibanco Holding S.A. reached a standstill. In June 2013, Cencosud and Itau signed an MOU to jointly run Cencosud's financial services business in Argentina and Chile, with a six-month exclusivity period for the completion of contract negotiations.

The due diligence process was completed in August 2013. In September 2013 the parties agreed to an extension of the original 90-day-period for the contract negotiations, with the intent to close the transaction within the following 30 days. As final contracts were not completed during the agreed-upon period, the MOU was terminated.

About Cencosud

Cencosud is a leading multi-brand retailer in South America, headquartered in Chile and with operations in Chile, Brazil, Argentina, Peru and Colombia. The company, founded by Chairman Horst Paulmann, operates in supermarkets, home improvement stores, shopping centers and department stores, always aiming to deliver the right product at the right price to Latin America's growing middle class.