Vitro Shareholders Push On with Restructuring

Shareholders of troubled glass company Vitro have approved its controversial $3.6bn restructuring plan, a step in forcing bondholders to accept the company’s terms. The borrower said that all shareholders approved the proposal. The proposed restructuring of $3.6bn in debt has angered bondholders after a Mexican judge said Vitro could include $1.9bn in intercompany debt as part of the bondholder tally, allowing it to claim that 51% of creditors had agreed to the restructuring terms. The shareholder approval follows quickly after a court-appointed arbitrator asked for an extension in Vitro’s restructuring. The proposal includes $814.7m in new 2019 bonds, a fee of up to $32.7m and mandatory convertible debt of $95.8m. JPMorgan has estimated that creditors who accept the deal may recover between 48 and 60 cents on the dollar, depending on the level of debt-holder support. The situation has also spooked analysts who argue that Vitro’s success could translate into a loss for other corporate issuers in the region. “From my experience, once you have a rotten apple in the barrel, this spreads,” economist Arturo Porzecanski told investors in a conference call this week. “Vitro is the rogue debtor corporation of the decade.” He pointed out that so far there is no indication that the pricing, structure or covenant language of new deals reflects the Vitro restructuring but, he said, this could all change if the company gets away with its plans.