Fintelco
...Profile 5
Overview of Economic Developments 6
General Economic Structure 7
External Debt Structure 7
Fiscal Structure 8
Economic Developments under the Convertibility Plan 8
Structural reform 9
Institutional and political factors 10
External shocks 10
Debt dynamics 10
The banking system 11
Question & Answers 12
References 15
Appendix A1 - History of Events 16
Appendix A2 – Continental Cablevision / Fintelco Joint Venture – Project Cash Flows 18
Appendix A3 – Comparable U.S Companies 21
Appendix A4 – Cost of Capital 22
Appendix A5 – Valuation 23
Background Argentina, Prior to 1991
Argentina entered the decade of the 1990s having experienced a dismal economic performance over a prolonged period of time. From about 1975 through 1990, the country was plagued by high inflation and general economic stagnation. Inflation seldom fell below 100 percent; there were bouts of hyperinflation, notably in 1985 and 1989–90. Real GDP in 1990 stood 6 percent below the level in 1974. Over this period, the general stance of economic policy was inward-looking and interventionist, although there were occasional attempts to adopt more market oriented policies. All-out crises erupted twice during the 1980s. Early in the decade, the mounting fiscal imbalances led to high real interest rates, a string of corporate bankruptcies, growing insolvency in the banking system, and a loss of confidence. An overvalued exchange rate had created a large cumulative balance of payments deficit, causing a serious debt service problem and an eventual loss of market access. Inflation accelerated, and real GDP declined by almost 10 percent from 1980 to 1982. Likewise, in early 1989, a failure to adjust the official exchange rate and public sector prices in the face of accelerating inflation led to a sharp deterioration in the public finances, an attack on the...
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