Bloomberg News

Vitro Restructuring to Propose $910 Million of New Bonds

November 02, 2011

Nov. 1 (Bloomberg) -- Vitro SAB, the Mexican glassmaker that defaulted on $1.5 billion of debt, said a restructuring proposal including $910 million of new bonds was presented to creditors by the company’s court-appointed arbitrator.

The plan would include the issuance of $814.6 million of new bonds maturing in 2019 with an interest rate of 8 percent and $95.8 million of debt convertible to shares with an interest rate of 12 percent, according to a statement yesterday to the Mexican stock exchange.

Vitro’s creditors have 10 working days to approve the restructuring plan, the company said in the statement. If approved by creditors, the arbitrator then has seven more working days to present the plan to the Mexican judge overseeing the case, Vitro said.

“Two litigious funds and their handful of passive followers” seeking “short-term gains” are trying to obstruct the company’s bankruptcy proceedings, said Claudio del Valle, head of Vitro’s restructuring, according to yesterday’s statement.

U.S. lawmakers sent a letter to Mexico’s ambassador on Oct. 20 criticizing Vitro’s use of $1.9 billion of inter-company debt to control bankruptcy proceedings in Mexico.

Vitro and its subsidiaries are engaged in a “a multi-year scheme” to avoid paying bondholders, Wilmington Trust NA, the bondholder trustee under two series of notes issued by Vitro and guaranteed by the units, said in a complaint filed Aug. 17 in New York state court in Manhattan. Wilmington, a unit of M&T Bank Corp., seeks to recover $1.35 billion owed under notes issued by Vitro.

Vitro said it had previously offered creditors an interest rate of 10.5 percent on the convertible notes. The bonds would convert to a 20 percent stake in Vitro if the company misses the maturity payment, up from 15 percent under the previous plan.

Roberto Riva Palacio, a Vitro spokesman, said in August that creditors, including the intercompany debt that Vitro controls, will vote on the debt proposal by Nov. 14.

--Editors: Stephen West, Dan Reichl

To contact the reporters on this story: Jonathan Roeder in Mexico City at jroeder@bloomberg.net; Crayton Harrison at tharrison5@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.


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