to Default on February 2 Payment; Intends to Restructure Debt
Vitro has announced that it does not intend to make several scheduled
payments due on February 2, leading to a default of several loans.
The company has a payment due of $12.9 million for a loan ($300
million in principal) scheduled to be paid off in 2012 and $31.9
million for a loan ($700 million in principal) scheduled to be paid
in 2017, the failure of both of which will constitute a default
on the loans. In addition, the company has a $126 million outstanding
balance in principal on another loan, due in 2013, which also would
be considered a default when the February 2 payments are not made,
according to a statement issued by the company.
Under the terms of the company's agreements, a default allows the
creditors to declare all three loans, including both principal and
accrued interest, to be "immediately due and payable."
Company officials say "they intend to maintain operations
and continue business relationships with its customers and suppliers
as they seek to restructure debt."
As of December 31, company officials say the company had unrestricted
cash on hand and cash equivalents of approximately $103 million
dollars, for operating costs and expenses.
Vitro also has initiated discussions with investors, bondholders
and creditors "to achieve an organized financial restructuring
to improve its balance sheet," but notes that "there can
be no assurance that the [its] discussions with the Counterparties
[investors], its bondholders, and other creditors will be successful."
In addition, the company has adopted a significant and focused
cost reduction plan, which includes reducing the company's workforce,
canceling airplane leasing contracts, divesture of non-productive
assets and eliminating the outsourcing of non-strategic services,
as part of the measures that have been adopted by the company to
improve its balance sheet. Vitro estimates that these initiatives,
as well as those aimed at reducing operating costs, reducing corporate
expenses and improving efficiency, will represent annual savings
between $80 and $120 million dollars.
"Vitro is confident that it is taking the right steps to position
the company for the future," reads a statement from the company.
"Vitro sees this as a temporary measure to allow the necessary
time to negotiate with all parties involved while ensuring it will
be able to continue providing the quality products and services
its broadly diversified customers need, and also provide it with
the wherewithal to pay for the materials and services it needs to
manufacture such products."
HERE for the full text of the statement from Vitro.
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