Vitro Bondholders Told to Call Lawyers

Mexico’s Vitro plans to miss $44.8m in interest payments due Monday to preserve cash so it can continue operations. The glassmaker owes $12.9m on its 8.625% of 2012 bonds and $31.9m on its 9.125% of 2017s, and will have a 30-day grace period. The decision was prompted by a notice of default from 4 bank counterparties to Vitro derivative contracts, claiming a lack of payments totaling $293m. Vitro has been in discussion with derivative counterparties since disclosing a negative position of $227m in October that reached $358m as of year-end. Blackstone, Vitro’s advisor on the derivative and debt processes, told bondholders this week in a conference call to organize and seek legal counsel, according to a bondholder who participated. The call did not give further details of the company’s plans, the investor adds. Officials at Vitro and Blackstone decline to comment on the process. The outstanding total amount of the bonds is about $1.2bn. Meanwhile, Moody’s put on review for possible downgrade the Baa1 rating of the certificates VENACB 05 of Covisa, Alcali and Comercializadora issued in 2005 by ABN AMRO as trustee. The certificates are backed by trade receivables generated by Covisa and Alcali, which are glass container subsidiaries of Vitro.