TMM still short of needed response in exchange for 9½% notes

New York, July 19 - Grupo TMM SA said holders have tendered $176.771 million principal amount of 94.85% of its 9½% senior notes due 2003 in its exchange offer, less than the 98% required under the terms of the exchange.

Holders have also tendered 96.35% of the 10¼% senior notes due 2006, or 96.35% of the amount outstanding, more than the required 95% response.

Both figures are as of 5 p.m. ET on July 16.

The exchange runs through 5 p.m. ET on July 22.

At the last announcement on July 2, Grupo TMM extended the consent deadline on its exchange offer to 5 p.m. ET on July 16 from July 8 in light of the Independence Day holiday weekend in the United States. TMM said it was extending the consent date to provide all noteholders who wish to participate in the exchange offer sufficient time to vote their notes and benefit from the consent fee.

As previously announced, Grupo TMM, a Mexico City-based railroad transport operator, said on June 23 that it had begun an exchange offer for its 9½% notes and 10¼% notes in order to implement the previously announced restructuring of the debt. Grupo TMM said it was also soliciting consents to proposed amendments to the indenture governing the 2006 notes, as well as noteholder acceptances of pre-packaged plan of reorganization.

The company initially set July 8 as its consent deadline and said the exchange offer is scheduled to expire at 5 p.m. ET July 22, subject to possible extension, and the ballots for the pre-packaged plan must be received by that deadline. Holders whose consents are validly received may not withdraw any existing notes once they are tendered, except under limited circumstances.

Grupo TMM said it is offering holders of its existing notes new senior secured notes due Aug. 1, 2007 (although the maturity is subject to extension to Aug. 1, 2008 at the company's option) for the existing notes. The new notes will initially carry a 10½% coupon, with the interest payable in cash or in additional new notes, provided that Grupo TMM must pay at least 2% annually in cash interest. If the company elects to pay a portion of the interest in additional new notes, the interest rate will increase. The new notes will be guaranteed on a senior basis by each of the company's wholly owned subsidiaries and will be secured by a pledge of certain assets of Grupo TMM and the guarantors. The new notes are redeemable at any time at the option of the company, and it is required to redeem or repurchase notes with the proceeds of certain assets sales or other payments.

The new notes would be exchanged for the existing notes at a ratio of $1,000 principal amount of new notes for each $1,000 principal amount of existing notes.

Holders who tender their existing notes and who deliver their consents by the consent deadline will be entitled to receive a pro rata portion of $21.1 million of the new notes as a consent payment.

Grupo TMM said that the primary purpose of the consent solicitation is to eliminate substantially all of the restrictive covenants of the indenture governing the 2006 notes. Holders who tender their 2006 notes will be deemed to have given their consent to the proposed amendments.

The company said that it will also pay accrued unpaid interest on the existing notes through the settlement date of the exchange offer. The interest will be paid in additional new notes, with a principal amount equal to the amount of the accrued interest. The company calculated that as of July 22, the scheduled expiration date of the exchange offer, the amount of accrued interest on the 2003 notes and the 2006 notes will be about $186 and $190, respectively, per $1,000 principal amount of the existing notes.

Grupo TMM said that it has entered into voting agreements with the holders of about 72% of the outstanding principal amount of the existing notes (71% of the 2003 notes and 72% of the 2006 notes), under which they have agreed to exchange their existing notes for the new notes and support the proposed restructuring.

Concurrently with the exchange offer, Grupo TMM is also soliciting votes to accept a prepackaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code or, at the company's option, Mexican bankruptcy law. If confirmed, the prepackaged plan would accomplish the restructuring on substantially the same terms as the out-of-court restructuring through the exchange offer.

Grupo TMM said it only expects to seek confirmation of the prepackaged plan if the minimum tender condition to its exchange offer is not satisfied or waived.

The company said the exchange offer would be conditioned upon, among other things, its receipt of valid tenders (including exchanges under the terms of the voting agreements) representing at least 98% of the 2003 notes and at least 95% of the 2006 notes.

Innisfree M&A Inc. is the solicitation agent, information agent and voting agent for the exchange offer and solicitation (call 877-750-2689).

Questions regarding the proposed restructuring should be directed to Martin F. Lewis and Ronen Bojmel at Miller Buckfire Lewis Ying & Co. LLC, the company's financial adviser (call 212 895-1805 or 212 895-1807) or to Alan D. Fragen (call 310 788-5338) or Oscar A. Mockridge (call 212 497-4175), both of Houlihan Lokey Howard & Zukin Capital, the ad hoc bondholders' committee's financial adviser.

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