UPDATE 1-Chile’s Cencosud may seek $2 bln financing-source

* Cencosud planning for medium-term growth opportunities

* Proposed capital increase to be valid for 3 years

* Shares fall sharply as market anticipates cap increase
(Updates with source, analyst comments)

SANTIAGO, April 12 (Reuters) – Chilean retailer Cencosud
(CEN.SN: Quote, Profile, Research) will propose to shareholders a three-year capital
increase worth up to $2 billion, a source close to the deal
said on Tuesday, as the stock price fell sharply in
anticipation of a flood of new shares.

However, the source said the capital increase would be just
one of the options to get financing that could also come from
the company’s own resources, issuing bonds or bank loans.

Cencosud’s shares fell 4.5 percent to 3,344 pesos in midday
trading. [ID:N12171915]

The retailer has supermarkets, home improvement stores and
department stores selling everything from food to clothing.

“We want to have a discussion with shareholders so that if
growth opportunities come up in the next three years, we have
the flexibility to be able to use part of the capital increase
and be able to exercise it if need be,” the source said, asking
not to be identified.

“What we want to discuss is planning for the medium term so
the company is prepared and has all the financing alternatives
available,” the source added.

Cencosud’s last capital increase was in 2008.

“A capital increase raises the supply of shares, knocking
the price lower,” one trader said.

Cencosud said last month its profit rose 21.6 percent in
2010 to 296.261 billion pesos (around $632.5 million) as
domestic consumer demand recovered from the global financial
crisis.
(Reporting by Antonio de la Jara, editing by Maureen Bavdek)

UPDATE 1-Chile’s Cencosud may seek $2 bln financing-source