Bondholders controlling 40 percent of Axtel’s SAB dollar notes will reject the Mexican phone company’s restructuring offer, according to a letter obtained by Bloomberg News from two investors in the creditor group.
Cleary Gottlieb Steen & Hamilton, a law firm representing the bondholders, called the debt exchange proposal “highly coercive” in a letter to Axtel Chairman Tomas Milmo Santos dated yesterday and provided by the investors, who received the letter directly from the lawyers. The first deadline for investors to tender bonds for the restructuring is tomorrow.
Axtel, which has been struggling with record losses as it tries to compete with billionaire Carlos Slim’s America Movil SAB, offered to swap debt due 2017 and 2019 for new notes due 2020 and cash in a restructuring that BCP Securities valued at 54 cents on the dollar. The company is in the process of selling tower assets to American Tower Corp. (AMT:US) for $250 million in a transaction subject to the success of the debt exchange.
Richard Cooper, an attorney with Cleary Gottlieb Steen & Hamilton, declined to comment on the letter in an e-mail, citing company policy. Axtel’s investor relations chief, Adrian de los Santos, and press official Julio Salinas didn’t respond to e- mails and calls seeking comment.
Bonds issued by Axtel due 2019 have rallied to 53.77 cents on the dollar from 49.18 cents on Dec. 26, the day the company announced the debt-swap proposal, according to data compiled by Bloomberg. The yield on the securities fell 2.16 percentage points to 22.77 percent.
The creditors represented by Cleary Gottlieb Steen & Hamilton are asking the company to extend the early tender date and initiate negotiations, according to the letter.
“The offer is unfair,” the law firm wrote in the letter. “Holders of the notes are being asked to make considerable sacrifices while the shareholders of the company will remain largely unaffected.”
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