Iusacell Plans Lawsuit Against Creditor

Mexican mobile operator Iusacell plans to file a lawsuit accusing one of its creditors, US investment firm Gramercy Advisors, of violating insider trading rules, local daily Reforma reported.

"We have evidence that [Gramercy's] legal advisors in Mexico illegally accessed information about [Iusacell] and then bought bonds. It has acted totally in violation of US and Mexican secrecy laws and we are preparing to formally accuse them of illegally using privileged information," the paper quoted Iusacell's legal affairs representative Luis Cervantes as saying.

The executive claimed that Gramercy has engaged in similar practices to profit from other financially troubled companies like Satmex, Altos Hornos and San Luis Corporación, Cervantes said. Gramercy would use the information to start bankruptcy rumors and then buy the firms' bonds at bargain rates, Cervantes alleged, adding that the firm has earned US$20mn-30mn alone from dealing with Iusacell bonds. The investment firm holds Iusacell bonds worth a total of US$55mn.

The accusations even go as far as extortion, since Gramercy demanded an US$8mn payoff to ensure that it would not subject Iusacell to involuntary bankruptcy proceedings in the US before it had completed restructuring talks in Mexico, Cervantes said.

Gramercy filed involuntary bankruptcy proceedings against Iusacell on July 24 in an attempt to prevent the firm's Mexican restructuring talks from succeeding.

Iusacell's lawyers expect a bankruptcy court in New York to discuss Gramercy's filing during September 12-18 and expect the judge to reject it. If Iusacell goes ahead with its counter suit it would file the charges with Mexico's attorney general, the securities and banking regulator CNBV and the SEC in the US.

Gramercy's legal advisor in Mexico is Nuevo León-based law firm Canales y Socios.

BNAmericas.com"

Posted to the site on 29th August 2006