US-based NII Holdings, which operates under the Nextel brand in Latin America, has filed for relief under Chapter 11 of the US Bankruptcy Code after failing to meet debt obligations.
In a statement, NII described the move, which it warned last month was…
US-based NII Holdings, which operates under the Nextel brand in Latin America, has filed for relief under Chapter 11 of the US Bankruptcy Code after failing to meet debt obligations.
In a statement, NII described the move, which it warned last month was likely to happen, as the first step toward restructuring its debt and improving its liquidity.
“The company has been in discussions with its major shareholders over the last several months and is optimistic that those discussions will lead to a debt restructuring plan that will be reflected in a plan of reorganisation that will be submitted in the proceedings in the near future.”
NII’s operating units in Brazil, Mexico and Argentina are not part of the US bankruptcy proceedings and will continue to operate as usual, NII said.
In a related filing, NII, which earlier this year hired UBS to assess its strategic options and Rothschild to improve its capital structure, said its debtors have a principle amount of about US$4.35bn of senior notes outstanding.
Specifically, these include US$800m of 10% notes due 2016; US$500m of 8.875% notes due 2019; US$1.45bn of 7.625% senior notes due 2021; US$900m of 11.375% notes due 2019; and US$700m of 7.875% notes due 2019.
Under the terms of the debt instruments, the principal and accrued interest is due immediately as a result of the Chapter 11 proceedings.
NII treasurer Daniel Freiman stated in court papers that the company had lost customers to rivals offering more attractive 3G services as it raced to complete the rollout of its own 3G network, US media reported.
NII’s competitors include Spanish telecoms group Telefonica and Carlos Slim’s Mexico-based America Movil.
Freiman reportedly added that NII consequently offered lower-priced wireless plans and relaxed its credit policies to attract new customers, which ultimately led to lower revenues and greater expenses related to bad debt.
In a statement on its H2 2014 results last month, NII said it had lost 77,000 subscribers in the quarter, bringing its total customer base to 9.4 million subscribers. Operating revenues were down 23% on the Q2 2013 result to US$969m. Net debt stood at US$4.8bn, while consolidated cash totalled US$1bn.
The treasurer reportedly said the company is focusing on improving its core markets and that debtors expect the Brazilian and Mexican units to return to “significant revenue growth” from 2015.
In August, NII agreed to sell Nextel Chile for a reported US$35m to a joint venture named Fucata comprised of Argentine media group Grupo Veintitres, British investment firm ISM Capital and US private equity firm Optimum Advisors.
Meanwhile, Fucata reportedly aims to tie up an acquisition of Nextel Argentina by the end of October. According to several local media reports, the asset is set to cost between US$200m and US$225m.
