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Iberia cuts share price
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April 2, 2001: 8:23 a.m. ET
Spanish government gives 30 percent discount to get offer off the ground
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LONDON (CNN) - The Spanish government slashed the initial public offering price of national airline Iberia to avoid a flop when trading begins on Tuesday.
SEPI, the holding company that holds the government's 54 percent stake, priced the shares at  1.19 ($1.05) each, valuing the company at about 1.1 billion. That's 30 percent below the range set earlier of 1.71 to 1.97.
The government's decision to cut the price of the offering was widely expected after institutional investors baulked at the IPO price, amid concerns about unresolved labour disputes and an economic downturn.
"The IPO market is particularly difficult at the present moment" as equity markets tumble across the globe, analyst Martin Borghetto told CNN ahead of the pricing.
"Investors are concerned that an U.S. (economic) slowdown and an expected European slowdown would not bode well for earnings," he said.
Late on Sunday, SEPI increased the number of shares earmarked for individual investors to 61.8 percent of the shares available. Institutional investors in Spain and abroad would be offered 32.6 percent -- slightly less than before -- and employees of the airline would receive the remaining 5.6 percent.
Iberia was worth 2.8 billion in 1999, when a group of investors including British Airways, American Airlines and Banco Bilbao Vizcaya Argentaria bought a 40 percent stake.
Iberia's valuation also include an 18 percent stake in travel reservation company Amadeus Global Travel. Analysts have argued that between half and three-quarters of the value of Iberia is made up by its holding in Amadeus. 
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