Bloomberg News

Vitro Shares Surge on Restructuring Approval: Mexico City Mover

February 09, 2012

Feb. 8 (Bloomberg) -- Vitro SAB, the glassmaker that defaulted on $1.5 billion of bonds in 2009, jumped the most in three weeks after a Mexican judge approved its restructuring.

Vitro rose 4.9 percent to 14.96 pesos in Mexico City, the steepest advance since Jan. 19. The benchmark IPC index rose 0.2 percent. The price on the company’s defaulted dollar bonds due 2017 rose 0.6 cent to 69.9 cents on the dollar, according to data compiled by Bloomberg.

Monterrey, Mexico-based Judge Sandra Lopez’s approval concludes a three-year legal battle in which Vitro challenged the country’s bankruptcy law by borrowing from itself to qualify as its own biggest lender. The judge accepted the plan after 74 percent of creditors backed it, allowing $1.9 billion of Vitro’s own so-called intercompany debt to be included in the vote.

“After all the problems, they’re finally letting the company carry out this plan,” Gerardo Copca, an analyst at Metanalisis SA, said by phone from Mexico City. “This is a step forward for the company.”

U.S. bondholders, including Elliott Management Corp., opposed the plan in Mexican and U.S. courts, arguing that the inclusion of intercompany debt let Vitro dictate restructuring terms.

The refinancing plan swaps the defaulted debt for $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 a 12 percent rate.

Vitro missed debt payments in February 2009 after the U.S. recession slashed demand for construction and auto glass. It was also hurt by $340 million of derivative losses from wrong-way bets on natural gas and currencies.

--With assistance from Jose Enrique Arrioja in Mexico City and Thomas Black in Dallas. Editors: Richard Richtmyer, Glenn J. Kalinoski

To contact the reporters on this story: Jonathan J. Levin in Mexico City at jlevin20@bloomberg.net; Jose Enrique Arrioja in Mexico City at jarrioja@bloomberg.net; Thomas Black in Dallas at tblack@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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