CISNEROS GROUP PLANS TO SELL INTEREST IN PUEBLO XTRA CHAIN

ELLIOT ZWIEBACH

CAROLINA, Puerto Rico -- The Cisneros Group, principal shareholders of Pueblo Xtra International here, said it plans to sell its interest in the 57-store chain at auction to focus on developing broadcast and entertainment opportunities throughout Latin America. The company hopes to have a deal completed within 4-6 months, Jeffrey Freimark, executive vice president and chief financial officer, told SN. Pueblo operates 57 supermarkets -- 24 Xtra Super Food Centers and 20 Pueblos in Puerto Rico; five Pueblos in the Virgin Islands, and eight Xtras in south Florida; it also holds the franchise for and operates 22 Blockbuster video stores in Puerto Rico and the Virgin Islands. Freimark told SN he anticipates bids from both financial investors and strategic players, although he declined to speculate on potential bidders. Bob Lupo, a high-yield securities analyst with PaineWebber, New York, said a strategic player with a presence in Florida would be likely to retain the Florida stores, while a financial buyer might opt to sell the handful of Florida units and concentrate on the stores in Puerto Rico and the Virgin Islands. Sales for the year ended last January were $1.17 billion, down 2.7% from $1.2 billion the prior year, while cash flow rose 3% to $67 million. For the 16-week first quarter ended May 20, sales were down 2.2% to $352 million. Sales for the second quarter ended Aug. 20 will show an increase, Freimark said. Cisneros Group, based in Caracas, Venezuela, paid $377 million in mid-1993 when it acquired majority control of Pueblo. It owns all of the company's stock except for a very small piece owned by management. Industry analysts told SN they estimate the chain could sell for $335 million to $470 million, or five to seven times Pueblo's cash flow of $67 million. Gustavo A. Cisneros, chairman and chief executive officer, said the decision to sell the company "is based on a desire to sharpen our focus in areas other than food distribution." Once the Pueblo chain has been sold, Cisneros said, the Venezuela company plans to direct its energies primarily toward the enhancement of its media, entertainment and broadcasting operations that extend throughout Latin America. Earlier this year Cisneros Group sold its 80 Cada supermarkets and 11 Maxys department stores in Venezuela to a combine of Venezuelan, Colombian and Dutch investors; however, it retains the franchises on 15 Burger Kings and 15 Pizza Huts in Venezuela and continues to distribute beverages there.