Vitro Arbitrator Says Restructuring May Extend Past Dec. 31

Date: 2 December 2011
Vitro SAB (VITROA), the Mexican glassmaker that defaulted on $1.5 billion of bonds, probably won’t conclude its debt restructuring by year-end as the company anticipates, the court-appointed arbitrator in the proceedings said.

External creditors, who oppose Vitro’s restructuring proposal, will raise more legal challenges with the judge in the case, arbitrator Javier Navarro-Velasco said by telephone from Monterrey, Mexico. He will present the proposal to the judge by Dec. 5 and said he expects 70 percent of creditors, including intercompany debt controlled by subsidiaries, to approve.

“I couldn’t say with certainty that this is going to be resolved by Dec. 31,” he said. “It could be a little more.”

Vitro said yesterday it expects to complete a deal “before year’s end.” The proposal by the San Pedro Garza Garcia, Mexico-based company includes $814.6 million of new bonds maturing in 2019 and $95.8 million of mandatory convertible debt. Vitro said Nov. 22 that shareholders approved the plan.

“We are currently working to implement our plan as soon as the judge’s ruling is issued to all creditors who timely consent to the restructuring plan,” Chief Restructuring Officer Claudio del Valle said in the statement yesterday.

Consenting creditors would likely get securities and cash with a recovery on current face value of 47.6 percent to 60 percent, depending on how many holders agree, Jacob Steinfeld, a JPMorgan Chase & Co. analyst in New York, said in a Nov. 7 note. Nonconsenting creditors would recover less, he said.

‘Impossible’ Deadline

Jaime Guerra, a lawyer representing the group of dissenting bondholders in Mexico, said today it’s “materially impossible” for the case to be resolved by the end of the year.

“The truth is I think a lot still has to be resolved,” he said in a phone interview from New York. “Our objections are still pending.”

Navarro-Velasco said external creditors have presented motions for him to be dismissed as the case’s arbitrator and the judge may decide on the requests within 45 days.

Guerra confirmed that the bondholders have asked for Navarro-Velasco’s removal because “he hasn’t fulfilled his duties as arbitrator.”

Navarro-Velasco said he was able to achieve a proposal more favorable for external creditors than Vitro’s original plan, which had included $850 million of new bonds maturing in 2019 and $100 million of debt that would convert to a 15 percent equity stake if the debt isn’t paid.

“It’s not the percentages that the creditors would like,” he said. “But are there benefits? Yes, there are.”

‘Viable Plan’

He said the mandatory convertible bonds could now convert to a 20 percent stake in Vitro and said the proposed interest rate on the notes is 12 percent, compared with the originally proposed 10.5 percent rate.

Vitro doesn’t have the capacity to take on more debt, and the proposal “is a viable plan and it’s also fair for creditors,” Navarro-Velasco said.

Vitro halted debt payments in February 2009 after posting derivatives losses of as much as $360 million and as demand for auto and construction glass plummeted during the U.S. recession. U.S. lawmakers have protested Vitro’s decision to include in the restructuring $1.9 billion of intercompany debt that was created 10 months after the default.

SOURCE NanoMarkets

Read more:

600450 Vitro Arbitrator Says Restructuring May Extend Past Dec. 31

See more news about:

Others also read

Proprietary laminate windows collect, store energy; convert it to electricityRIVIERA BEACH, FL – An innovative new patented technology transforms office building windows into "solar farms" and allows these structures to reuse collected energy and become self-sufficient in the event of a power outage.
DALLAS, Texas, December 22, 2011 /PRNewswire/ --ReportsnReports adds new market research report 'Solar Photovoltaic (PV) Power - Global Market Size, Installation Prices, Module Market Shares, Market Segmentation, Regulations and Key Country Analysis to 2020' to its store.
The University of Minnesota's historic Folwell Hall completed three years of extensive renovation, just time for the 2011 academic year.
The renewal process for AAMA Corporate Members is now open. AAMA Corporate Membership is available to businesses involved in the manufacture, sale or service of fenestration products and is renewed on an annual basis.
Today designers and architects are looking to the hotel bathroom as the new frontier of the guestroom, turning what has long been a mostly functional space into a haven and means of escape.
Glassman as one of the largest glass processing machine manufactures in the world presented ZAK Glass Technology Exhibition during 8-11 December 2011, in Mumbai, India.

Add new comment