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NII Holdings Files for Bankruptcy Protection

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Debt laden NII Holdings which operates Nextel branded services in Latin America has filed for chapter 11 bankruptcy protection from its creditors.

The company is seeking a court agreed restructuring of its debt to improve its liquidity, in a move which will typically see its debt reduced in exchanged for equity in the company.

In a statement, NII Holdings said that it has been in discussions with its major stakeholders over the last several months and is optimistic that those discussions will lead to a debt restructuring plan that will be reflected in a plan of reorganization that will be submitted in the proceedings in the near future.

It has been accused by one creditor, Aurelius Capital Management of defaulting on USD500 million of debt repayments.

The Chapter 11 bankruptcy filing protects the company from its creditors while it reorganizes its business affairs and assets, but only for a limited period. If a deal cannot be reached, then the company could see its assets seized.

The company currently lists assets of USD2.88 billion, but liabilities of USD3.47 billion.

The debt rating agency, Moody's recently said that it thinks debtholders might get as little as $0.20 on the dollar in a restructuring.

With headquarters in the USA, NII Holdings has about 9.4 million largely post-pay subscribers in Latin America. NII had approximately $4.14 billion in consolidated operating revenue for the LTM period ended 2Q'14 generated from a subscriber base across Mexico, Brazil, Argentina, and Chile.

NII Holdings has struggled in recent years as it took time to migrate from its legacy iDEN platform to faster more conventional cellular networks, and lost market share to its more nimble rivals. Attempts to claw back customers by lowering prices simply eroded margins and lead to higher defaults thanks to weaker customer credit quality.

The company's operating subsidiaries in Brazil, Mexico and Argentina are not part of the U.S. bankruptcy proceedings and will continue to operate on a "business as usual" basis.

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