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AHMSA, the long bankrupted Mexican steel company, is working with lenders UBS and Lehman Brothers to finance a workout of USD 1.4m in defaulted debt, sources close to the situation told Debtwire.
The plan, which is in advanced stages of negotiations, could be implemented in 2H08, one of the sources said. “There are over 1000 creditors involved. It will be complicated and will take time,” one of the sources said. The creditors include related parties, financial creditors and suppliers.
The yet-to-be-announced deal involves an all-cash payment to creditors and will replace a transaction agreed to by the majority of AHMSA creditors in May 2005. The previous workout languished in limbo until May 2006, when AHMSA notified the Bolsa Mexicana de Valores of its completion, only to falter yet again when management failed to submit related documentation to the SEC.
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The aborted restructuring – AHMSA’s third – contemplated swapping pre-petition claims for new debt securities and an equity stake in the company. The new deal does not include any equity and will entail a single cash payment, assuming it is approved by a local judge in Monclova, Coahuila.
AHMSA defaulted on USD 1.9bn in debt in 1999 under a bankruptcy code called ‘suspension de pagos’, which predates the current ‘concursos mercantiles’ regime and allows debtors to remain under court protection indefinitely. Controlling shareholders Xavier Autrey and Alonso Ancira used that flexibility to successfully ward off legal attacks by secured local creditors, who have since sold their AHMSA bank and bond debt, it has been reported. Autrey,Ancira and his brothers have also successfully defended themselves from tax fraud charges lodged against them by the Mexican federal government.
AHMSA walked away in 2000 from potential acquisitions by Mexican steel firm IMSA and later by Spanish firm Aceralia that would have left pre-petition shareholders with a 45% stake in the company. Management almost crossed the finish line in 2002 on a second transaction that would have swapped creditors into new debt and a 40% stake in the company before backing out yet again.
The largest single holder of AHMSA bonds is an entity related to the company and Alonso Ancira, said a professional that worked on previous workout attempts.
“Around USD 700m” of the total outstanding debt is in the hands of unrelated third parties, said a second professional still involved in the restructuring.
AHMSA has worked out approximately USD 400m of defaulted debt from its smaller divisions via ‘suspension de pagos.’ In those restructurings, creditors agreed to accept the nominal principal amount owed to them converted into Mexican pesos as of 25 May, 1999, or at an exchange rate of MXN 9.534 per USD 1.
AHMSA funded the payments to creditors of its smaller divisions via its own balance sheet as the company has not had access to external financing since 1999. No details regarding the possible syndication of the Lehman/UBS transaction were disclosed.
AHMSA reported EBITDA for the first nine months of the year of USD 384m on sales of sales topping USD 1.8bn. The company’s reported cash position as of 30 September was USD 334m.
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