The Globo group has temporarily suspended the creation of a new holding company, Globo S.A., and Henri-Philippe Reichstul has stepped down as the head of Globopar, the present holding company. The new entity would probably have been used as a vehicle to raise extra capital through an IPO in the second half of 2003. According to a news release issued by the group, ?Organizações Globo has decided to simplify and downsize its corporate structure in order to adjust to new market conditions. Several functions previously carried out by Globopar will now be taken over by TV Globo Ltda. Globopar will be responsible solely for group financial management?. Mr Reichstul remains on the board, which is chaired by Roberto Irineu Marinho. Ronnie Vaz Moreira has taken over as head of Globopar.
Market sources say Globo is studying ways of offsetting recent losses and in particular the perverse effect of currency depreciation on its debt. In the last 30 days alone the debt is reckoned to have mushroomed by about 1 billion Brazilian Reals, based on the first-quarter financial statements. Some measures in this direction will be taken during the current year. Management is pursuing new sources of funding in line with the present financial environment. It?s worth recalling that Globo is already on the record as saying it wants to reduce exposure to the pay-TV business. It has sold a significant portion of its stake in Sky, and the Marinho family is disposing of TV stations to capitalize Globopar.