Comerci Restructuring Drags On

Mexico’s Comerci has postponed the resolution of its derivative debt restructuring to June 10 from May 27. The fourth postponement in the month of May alone suggests that there is still substantial discord between the banks that provided the derivatives and the company on terms of a settlement. However, the absence of a long-term postponement or a decision to settle the process in court indicates some progress is being made. Market watchers see an imminent resolution for the derivatives problem, which will open the way for discussion on defaulted dollar and MXP bonds. “You can’t restructure the debt if you don’t know how much debt you have,” says a corporate analyst specializing in distressed debt. He notes that the gap between what Comerci says it owes and what derivative counterparties claim they are owed is still wide. Barclays notes that banks originally claimed the liability stands at $2.2bn, while Comerci says it is more like $1.1bn. Barclays expects settlement to fall somewhere between the two. However, the outlook for Comerci’s $200m in 6.625% bonds due June 15 is positive. “Based on our assumptions about derivatives liabilities, real estate, and cashflow valuations, we believe that the bonds (indicated at 46) are worth 54-57,” says Barclays. CCM has a portfolio of real estate assets with a book value of $2.4bn that could be monetized to pay creditors, it adds. As such, there is limited downside for the notes, it argues. In a May 11 report, ING said it expects a recovery value of 62.