September 16, 2016 / 5:06 PM / 2 years ago

Possible investigation of Chile's SQM may affect sale -analysts

SANTIAGO, Sept 16 (Reuters) - A media report saying the Chilean government has opened an investigation into fertilizer producer SQM could affect the ongoing sale process of a major stake in the company, analysts said on Friday.

Chilean newspaper La Segunda reported late Thursday that the Chilean Nuclear Energy Commission (CCHEN) is investigating the firm, one of the world’s largest iodine and lithium suppliers, for exporting lithium without previous authorization. The report cited the information as coming from a high-ranking CCHEN source who declined to be named.

In a statement, SQM responded that it has been in constant communication with CCHEN and has “submitted all of the required information requested to prove its compliance” with the conditions set by regulators.

Analysts said the possible investigation could affect the sale of a significant stake, owned by SQM’s controller Julio Ponce, who was fined $70 million in 2014 after an investigation into market manipulation.

“The local press is suggesting that the possible penalty could be the revocation of the permits that allow SQM to export lithium,” Banchile-Citi said in a note to clients.

The bank said it remained wary about the sale process, writing that “the underlying fundamentals of SQM’s business do not act a sufficient foundation, in our opinion.”

According to local media, SQM has 15 days to respond the CCHEN’s allegations.

Ponce, SQM’s controller, began the process of selling the bulk of his shares in the company in December. His holding firm Oro Blanco is looking to sell its majority stake in Pampa Calichera, which in turn owns around 23 percent of SQM.

Local media reported last week that the stake has attracted widely differing offers, with the highest worth up to $2.5 billion.

SQM’s Santiago-listed shares were down 1.2 percent at 1:14 p.m. local time (1614 GMT). (Reporting by Gram Slattery; Editing by Bernadette Baum)

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