June 6, 2020 / 12:38 AM / a month ago

Colombia could take on shares in companies hit by coronavirus

FILE PHOTO: The logo of Colombian Stock Exchange is pictured inside its building in Bogota, Colombia February 1, 2019. REUTERS/Luisa Gonzalez

BOGOTA (Reuters) - Colombia could take stakes in businesses struggling because of the coronavirus outbreak in a bid to help them continue to operate, a presidential decree published on Friday said.

The business owners would have to commit to buying back the shares within a certain time frame or selling the participation to a third party without affecting operations.

The measure seeks “to provide resources while the emergency continues,” the decree said. Colombia began a coronavirus quarantine in late March that is set to last until July 1.

Businesses must continue to pay salaries, taxes, pension and health contributions and all other financial obligations.

“These transfer programs will be based on technical suitability studies, which will include a valuation of each entity in which the state may acquire shares or participation and the determination of the conditions that will preserve public funds,” the decree said.

The country’s companies regulator has said the number of companies filing for protection under Colombia’s insolvency law could nearly double if the economy contracts 1.9% this year because of fallout from its coronavirus lockdown.

The Finance Ministry has estimated the economy will contract 5.5% this year.

Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Leslie Adler

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