Category: Corporate & Sovereign Strategy

Mexican cell phone operator Iusacell says it has closed its debt restructuring program and succeeded in a 90% uptake by debtholders of its $350 million debt swap offer. In May, the company offered to swap the 14.25% bonds due 2006 for $175 million of new bonds at 10%, maturing in 2013.

Brazil’s largest fixed-line telecoms operator, Telemar, which recently announced it is to pull its planned secondary share offering may well find the terms of its capital restructuring under threat. Brazil’s securities regulator (CVM) has ruled that only shareholders of preferred stock may vote on proposals to reorganize companies because of conflicts of interest. The ruling will strengthen the position of minority shareholders and reduce the power of Telemar’s controlling shareholders in the proposed share swap. In April the company revealed it was to restructure its share capital and unite stock from its various companies into a single class of new voting shares. However, shareholders of the company’s preferred stock were not happy. For example, in June US money manager Brandes Investment Partners, which holds 8.75% of Telemar’s preferred shares, filed its objections to the share conversion with the SEC, claiming the swap would be against its interests.

Mexican satellite operator Satélites Mexicanos (Satmex) presented a Chapter 11 reorganization plan, Friday, to the bankruptcy court of the Southern District of New York. The restructuring plan has been agreed by at least two-thirds of the company’s creditors and is the final stage of the company’s reorganization following the conclusion of its bankruptcy proceedings in Mexico at the end of July. The underlying bankruptcy agreement lays out that debt will be reduced from around $600 million, including interest, to $375 million, plus capitalization of between $335 million and $350 million, of which $60 million will become working capital. High-yield bonds will account for 80% of total shares and 45% of voting shares; the government will hold 20% of total shares and 55% of voting shares. Non-guaranteed debtholders will swap their debt for shares in the company. The bankruptcy proceedings in the US are likely to take 60 days.

Aluminum producer Alcoa has announced it will shed 570 jobs this month at its AFL Automotive subsidiary in Mexico. The job cuts are part of a restructuring being carried out by Alcoa to improve efficiency in the face of changing market conditions. AFL Automotive, which manufactures auto components for the North American market, employs around 19,000 in Mexico.

Rising government spending this year is pushing Belize to default on its debt, according to ratings agency Standard & Poor’s, which earlier this week downgraded the Central American nation from CCC- to CC, just two notches above a default rating. Belize, which has $960 million of foreign currency debt has said it will move to restructure its international bonds. The country has a debt-to-GDP ratio of 90% and spends over a quarter of its government revenue servicing that debt.

Panama’s president, Martín Torrijos, has replaced banking superintendent Delia Cardénas with experienced banker Olegario Barrelier, who is tasked with restructuring the financial sector. Barrelier was formerly vicepresident at Chase Manhattan Bank and chief executive of the National Banking Commission. He also served as vicepresident of operations and administration at Banco Andino. According to Cardénas, President Torrijos asked for her resignation so that he could move forward with his restructuring plans.

Brazil’s new bankruptcy law offers hope for indebted companies trying to stay viable, and assurance for their creditors, too.