Creditor Demands Iusacell Bankruptcy to Take Place in the US

A US creditor of Mexican mobile operator Iusacell has filed a request for the company to undergo involuntary bankruptcy proceedings in the US, Mexican press reported.

The creditor in question is US investment firm Gramercy Advisors, which holds US$55mn of Iusacell's US$150mn senior notes due 2004.

The Chapter 11 filing is directed against the immediate owner of Iusacell's spectrum licenses, Grupo Iusacell Celular. The holding company Grupo Iusacell, which controls Grupo Iusacell Celular, filed for bankruptcy protection under Mexican law in June to prevent creditors from interrupting its debt restructuring talks.

Then on July 18 Grupo Iusacell Celular filed for similar local protection. But the judge who took the subsidiary's request has merely forwarded it to the judge who is already considering the parent company's request.

Gramercy's filing can be seen as a sign of dissatisfaction with the US$416mn debt restructuring process Iusacell launched in May. Iusacell's proposal is to convert the 2004 notes into notes that mature in 2012, maintaining the 10% interest rate.

The restructuring proposal also includes US$190mn of tranche A loans, which Iusacell wants to convert into senior floating rate first lien notes due 2011, and US$76mn of tranche B loans which would convert into 10% notes coming to term in 2012.

Iusacell set about coordinating restructuring measures in January, following an agreement with creditors who were owed approximately 58% of the company's US$800mn total debt. The US$416mn restructuring plan followed the successful restructuring in June of US$350mn in notes due 2006.

Last year Mexican satellite operator Satmex found itself in a similar situation, with US creditors clamoring for bankruptcy proceedings to take place in the US rather than Mexico. In this case the US courts agreed to allow Mexican courts to supervise the restructuring talks and arrive at a final agreement, which the US courts would then deal with.

BNAmericas.com"

Posted to the site on 26th July 2006