Mexico's Iusacell fails to pay $25 mln interest due
biz.yahoo.com
Reuters
Monday June 2, 9:46 pm ET
MEXICO CITY, June 2 (Reuters) - Iusacell (NYSE:CEL - News;
Mexico:CELV.MX - News), Mexico's third largest mobile phone
operator that is struggling to finance its debts, said on Monday it
suspended a $25 million interest payment on its bonds due 2006.
Iusacell, whose main
shareholders are Verizon
Communications Inc.
(NYSE:VZ - News) and
Vodafone Group Plc
(London:VOD.L - News), has
outstanding $814 million
debt, including a $266 million
syndicated bank loan, $350
million in bonds due 2006
and another $150 million in
notes maturing next year,
plus other smaller debts.
Standard & Poor's last week reduced its credit rating on
Iusacell's debt to "CC" from "CCC+" on worries that the company
could possibly fail to pay a $25 million coupon.
Iusacell revenues totaled $517 million in 2002 and the company
reported a net loss of $201 million. In the last few months, it has
shed 42 percent of its workforce to reach 1,650 employees amid
debt restructuring talks with creditors.
"The company has decided that while a debt restructuring
agreement with its creditors is still outstanding it has suspended
the payment due June 1 for $25 million from the 14.15 percent
bond which matures in 2006," Iusacell said in a statement.
Iusacell said it is still technically not in default. "The company has
a period of 30 days to make the interest payment before being
declared in default," it said.
"If the payment were not to be made inside 30 days, default
would occur ... and the bond holders would have the right to
speed up the principal on the bonds or take other legal actions
that they consider appropriate," Iusacell said.
In a news conference late Monday, Iusacell officials said the debt
restructuring plan could be ready in three weeks and the interest
payment would be included inside the new proposals, alongside
a new business plan.
The plan could include a new bond issue, with lower rates and
less principal, and a cash payment, or a combination, officials
said.
Shares of Iusacell, which has around 2.1 million subscribers, on
Monday rose 0.95 percent at 0.424 pesos on the Mexican
bourse. Its ADRs closed up up 1.23 percent at $4.10. |
