Four Vitro Creditors File Petition for Involuntary
Bankruptcy Against 15 of Company's U.S. Subsidiaries; Vitro Says
Business as Usual
November 19, 2010
Four Vitro creditors, unhappy with a recent debt settlement offer, filed a petition for involuntary bankruptcy late Wednesday against 15 of the company’s U.S. subsidiaries, including Vitro America, according to court documents.
The noteholders, which own approximately $75 million (about 6 percent), of the Mexico-based company’s debt, list the following Vitro America subsidiaries as part of the filing: Amsilco Holdings Inc.; B.B.O. Holdings Inc.; Binswanger Glass Co.; Crisa Corp.; Super Sky International Inc.; Super Sky Products Inc.; Troper Services Inc.; V-MX Holdings LLC; Vitro America LLC; Vitro Asset Corp.; Vitro Chemicals, Fibers & Mining LLC; Vitro Packaging LLC; VVP Auto Glass Inc.; VVP Finance Corp.; and VVP Holdings LLC.
The creditors that brought the action forth include Knighthead Master Fund LP in New York, with a claim of approximately $42 million in senior notes; Brookville Horizons Fund L.P. in Greenwich, Conn., with a claim of $2 million in senior notes; Davidson Kempner Distressed Opportunities Fund LP in New York, with a claim of approximately $11 million in senior notes; and Lord Abbett Bond-Debenture Fund Inc. in Jersey City, N.J., with a claim of $20 million in senior notes.
According to a statement issued by Vitro S.A. B. de C.V. late yesterday, it had “commenced a tender offer, exchange offer and consent solicitation in connection with its anticipated prepackaged Concurso plan in Mexico” on November 1.
However, in a statement issued yesterday by the noteholders involved in the filing, the creditors “believe that Vitro’s solicitation does not offer adequate consideration to the noteholders.”
“We believe Vitro's plan significantly undervalues the company, undercounts the amount and ratable portion of the noteholders' claims, and inappropriately redistributes value away from noteholders to Vitro's shareholders and insiders,” write the creditors in the statement.
Vitro chief restructuring officer Claudio Del Valle, however, is optimistic that the situation will be resolved, according to the company statement.
“Vitro SAB expects that these offers and solicitation will be concluded successfully and that the issues raised by the ad hoc noteholder group will be resolved,” says Del Valle.
“We are reviewing the involuntary filing,” Vitro America president Arturo Carrillo told USGNN.com™. “We intend to continue to conduct business as usual. Consistent with applicable law, the company will continue to operate its business in the ordinary course, with full authority to fulfill its contractual and financial obligations.”
As for employees, they should remain unaffected as well, he says. “We currently have no layoffs planned and intend to continue paying our employees' wages, salaries and benefits in the ordinary course,” says Carrillo.
The company currently is considering its response to the petition filed against it. “We are reviewing the filing and, in consultation with the company's legal and financial advisors, we are considering an appropriate response,” says Carrillo. “We are working with our advisors to resolve it as soon as possible.”
And Carrillo echoes Del Valle’s optimism. “We continue to have a strong relationship with our U.S. lender and believe we currently have sufficient cash availability to fulfill ordinary course obligations to employees, customers and trade vendors as they become due,” he says.
As for further negotiations, the company still hopes to resolve the debt utilizing a tender offer and exchange. “Vitro SAB, our ultimate parent company in Mexico, is the issuer of the bonds held by the petitioning creditors,” adds Carillo. “Our parent company continues with the announced Tender Offer and Exchange Offer and Consent Solicitation and its plan to enter a Concurso Mercantil of Vitro SAB in December.”
The noteholders also have filed a motion for an expedited hearing on the matter, and are requesting a hearing on Monday, November 23, “or at such other time as soon thereafter as the court’s schedule might allow.” They claim the expedited hearing is necessary “to prevent certain specified transfers, uses, sales or leases of property or interests of the alleged debtors, which could materially alter the alleged debtors’ current assets and liabilities, and prohibit any extraterritorial transfer, sale, distribution, acquisition, trade, exchange or other disposition of any of the alleged debtors’ respective assets or property currently located within the territorial jurisdiction of the United States.”
Vitro has until December 9 to respond to the case, which was filed in the U.S. Bankruptcy Court for the Northern District of Texas.