Category: Corporate & Sovereign Strategy

A day after the bankruptcy judge in charge of troubled Brazilian air carrier Varig called for a new auction on July 12, a new buyer appears to have emerged. A group led by local businessman Roberto Lima Netto is reported to be ready to offer $600 million for the airline, topping an offer of around $490 million made on June 23 by Varig’s former cargo unit, VarigLog, following the collapsed financing of an employee-led group that had bid $449 million at the original auction on June 8.

A court in Frankfurt, Germany, has ruled that Argentina must pay back the capital and accrued interest on its defaulted bonds to two private German investors because the country is no longer insolvent or in a state of emergency. The ruling may have set a precedent for other lawsuits pending against Argentina, although it is not clear whether state assets can be seized. The government defaulted on its bonds in 2001 and put forward a debt swap offer in 2004. However, around 24% of the sovereign’s bondholders refused to take up the offer.

The restructuring of Telemar’s share capital may founder in the face of opposition from one of its shareholders. Brazil’s largest fixed-line telecoms operator announced in April that it was planning to restructure it share capital and unite stock from its various companies into a single class of new voting shares. US money manager Brandes Investment Partners, which holds 8.75% of Telemar’s preferred shares, has filed its objections to the share conversion with the SEC, claiming the restructuring is against its interests.

Mexican steelmaker Altos Hornos de México (Ahmsa) has agreed a new debt restructuring plan with a “substantial number” of its creditors, according to the company. The deal offers creditors $250 million in cash, $600 million in 10-year bonds yielding 9% annual interest and $150 million in convertible bonds, as well as a 27% equity stake. Ahmsa defaulted on $1.8 billion of bank loans and debt securities in 1999.

Ecuador’s rightest presidential candidate, Cynthia Viteri of the Partido Social Cristiano (PSC), has said that unlike her rivals she is prepared to restructure the country’s external debt. As at the end of last year, Ecuador’s external debt totaled $10.6 billion or 32.8% of GDP. The country spends $2.8 billion a year, or 33.3% of its annual budget, servicing its debt. The PSC is so far in third position in the polls for Ecuador’s upcoming elections in October.

Mexican cell phone operator Iusacell has launched a $350 million debt swap as part of a larger debt restructuring program. The firm reached an agreement with creditors to restructure $750 million of debt in January, following protracted negotiations. Iusacell is offering to swap 14 ¼% bonds, due 2006, for new bonds at 10%, maturing in 2013. The offer is due to expire on May 18.