 
Vitro Restructuring Proposal Remains Unfinalized;
Company Continues to Work on Revised Proposal
August 10, 2010
As part of Vitro's debt restructuring discussions with creditors,
the company recently presented a restructuring counterproposal to
representatives of certain holders of senior notes, according to
a company statement. Though the proposal was not accepted, company
officials say "Vitro continues to focus its efforts on reaching
a consensual restructuring agreement with its creditors and is currently
working to finalize a consent solicitation statement, expected to
be launched in the next few days."
The company's statement continues, "During this time, Vitro
maintains the financial resources to continue providing uninterrupted
high quality products and services."
The recent counterproposal provided for the restructuring of approximately
$1.5 billion of Vitro's debt, which includes the Senior Notes and
other impaired debt, and consisted of the following components:
- $500 million of new notes with an 8-year term, bullet amortization
and cash interest payments of 3 percent in the first year, stepping
up by 1 percent every year thereafter;
- $350 million of new notes with a 7-year term and interest payments
of 3.0 percent and 4.0 percent in the first and second years,
respectively, with 8.0 percent thereafter. However, the company
would have the option to pay in kind (PIK) 100 percent of the
associated interest during the first two years, and the new notes
will have an amortization schedule of 2.5, 5, 12.5, 15, 15 and
50 percent in years two through seven, respectively;
- $80 million Mandatory Convertible Debentures with a 5-year mandatory
conversion into 10 percent of the common stock of Vitro if not
paid in full at maturity. The MCD provides a 10.5 percent PIK
interest rate and prepayment discounts of 30.2, 24.2, 17.7, 10.6
and 2.9 percent in years one through five, respectively; and
- $75 million cash tender to retire debt. Approximately $275 million
of the company's secured debt, account receivables financing programs
and other unsecured debt, mainly at the subsidiary level, would
not be affected by the proposed restructuring.
According to Albert Chico Smith, Vitro's corporate communication
and social responsibility manager, these changes will have no impact
on customers.
"Vitro continues to focus its efforts on reaching a consensual
restructuring agreement with its creditors and is currently working
to finalize a Consent Solicitation Statement, expected to be launched
in the next few days," Smith told USGNN.com. "During
this time, Vitro maintains the financial resources to continue providing
uninterrupted, high-quality products and services, which means we
will continue serving our customers as usual."
Need more info and analysis about the issues?
CLICK
HERE to subscribe to USGlass magazine.
|