Mexico's Controladora Comercial makes Chapter 15 bankruptcy filing

By Caroline Salls

Pittsburgh, July 16 - Controladora Comercial Mexicana, SAB de CV made a Chapter 15 bankruptcy filing Friday in the U.S. Bankruptcy Court for the Southern District of New York in connection with its Mexican restructuring proceedings.

Foreign representative Fernando del Castillo Elorza said in a statement filed with the court that the company made the Chapter 15 filing to gain U.S. recognition of a voluntary insolvency proceeding pending in the District for Civil Matters in Mexico City.

The foreign representative said the company has filed a pre-negotiated plan of reorganization in the Mexican case under which derivative counterparties have agreed to exchange their claims for a share of a distribution package, including a new term loan, a new asset-linked debt facility and new secured bonds.

The term loan consists of two tranches, a Ps. 5.255 billion amortizing tranche and a Ps. $3.408 billion bullet tranche, and will mature on June 30, 2018.

Interest on the terms loans will accrue at the 28-day TIIE rate plus 275 basis points through June 30, 2012 and at the 91-day TIIE rate plus 400 bps from July 1, 2012 through maturity.

The asset-linked facility will include a Ps. 4.151 billion tranche and a Ps. 1.616 billion tranche.

Tranche I of the asset-linked facility will mature on June 30, 2016, and tranche II will mature on June 30, 2012.

Pricing on tranche I was set at 9¼%, while pricing on tranche II will be based on the change of value of the dollar plus 75 bps.

Meanwhile, the new bonds will include Ps. 1.951 billion of 9¼% peso-denominated bonds due June 30, 2018 and $223.9 million of 7% dollar-denominated bonds due June 30, 2018.

Also under the plan, commercial banks will receive a portion of the new term loan and asset-linked facility, and the company's noteholders will receive a portion of the new bonds.

The company said the plan is supported by holders of more than 85% of eligible debt and claims.

Controladora Comercial is asking the bankruptcy court to issue an injunction keeping creditors from taking any actions to enforce judgments or seize company assets.

According to court documents, the company has more than $1 billion in both assets and debt.

Elorza said the principal debt consists of unsecured notes, Mexican commercial paper and unsecured bank loans.

Controladora Comercial Mexicana is a Mexico City-based retailer. The Chapter 15 case number is 10-13750.

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