NII Holdings, which runs mobile operations in three Latin American markets under the Nextel brand, announced a restructuring plan with which it hopes to exit the bankruptcy protection it entered in September.
Steve Shindler, NII Holdings CEO, said the plan “provides a path for the company to emerge from bankruptcy in a healthy financial position to effectively compete in the wireless marketplace”.
The company and its 12 wholly-owned subsidiaries agreed on the plan’s “material terms” with their major stakeholders, including the two largest creditors and an official committee of unsecured creditors.
The terms of the restructuring plan — outlined in a filing with the US Securities and Exchange Commission — include strengthening the company’s balance sheet by converting $4.35 billion of unsecured notes into equity interests.
Another step is to provide $500 million of new capital through a $250 million rights offering of company stock, available on a pro rata basis to holders of the company’s senior notes; and another $250 million of exit financing in the form of debt.
The third element of the plan is the implementation of a global settlement of all claims related to “certain complex intercompany and inter-creditor disputes” — likely to include a dispute with hedge fund Aurelius Capital Management.
NII had warned in August that it faced bankruptcy following the latest set of disappointing quarterly results which showed it was losing customers in Mexico. It also offers a service in Brazil and Argentina.
It subsequently entered Chapter 11 bankruptcy protection in September, with Dan Freiman, the company’s treasurer, quoted by Bloomberg as saying that while the company was building out its 3G network, it was subject to “increasing turnover of its customer base as customers were offered more attractive services by its competitors on their 3G networks”.
As well as the competitive factors, court papers said NII holdings received a notice from Aurelius Capital Management earlier in the year, alleging it was in default on $500 million of unsecured notes.