Iusacell to issue first-lien, second-lien notes March 1 under plan loan exchange

By Caroline Salls

Pittsburgh, Feb. 5 - Grupo Iusacell Celular, SA de CV plans to issue $189.81 million of its senior floating-rate first-lien notes due 2011 and $203.23 million of its 10% senior subordinated second-lien notes due 2012 on March 1 in exchange for its tranche A and tranche B loans under its plan of reorganization, according to a T-3 filing with the Securities and Exchange Commission.

From May 25, 2006 to July 26, 2006, the company solicited consents to exchange the loans, and holders of about 98% of the existing notes agreed to tender their notes upon final court approval of the company's plan of reorganization.

According to the filing, the $189.81 million principal amount of first-lien notes to be issued on March 1 is subject to any increase resulting from any capitalization of the company's restructuring payment or decrease resulting from the payment of any Mexican rights offering amount under the plan of reorganization that will be filed with the Seventh District Civil Court of the First Circuit in Mexico City.

The plan will be filed as part of Iusacell's concurso mercantil reorganization proceeding filed on June 2, 2006 under the Mexican Business Reorganization Act.

If the plan is approved by the Mexican court, $189.81 million of the outstanding tranche A loans will be canceled and the holders of the existing loans will receive $1,000 principal amount of first-lien notes for each $1,000 principal amount of existing loans previously held.

For the $203.23 million of tranche B loans outstanding, holders will receive $900 principal amount of second-lien notes for each $1,000 principal amount of loans held.

On the date on which the new notes are issued, holders of tranche A loans will also receive an additional cash payment equal to the interest that would have accrued on $1,000 of notes from March 31, 2006 to the issue date.

Holders of tranche B loans will receive an additional cash payment equal to the interest that would have accrued on $900 of second-lien notes from March 31, 2006 to the issue date.

In addition, the company may elect to capitalize up to 30% of its second-lien notes restructuring payment, in which case the principal amount of notes issued will be increased, on a dollar-for-dollar basis, by the capitalized amount.

Holders of first-lien notes will also receive an additional cash payment equal to the total quarterly amortization amount of principal that would have otherwise occurred before the issue date.

Any additional first-lien notes restructuring payment will decrease the principal amount of first-lien notes issued on the issue date on a dollar-for- dollar basis.

Iusacell is a cell phone company based in Mexico City. It had an involuntary Chapter 11 case filed against it on July 14 in the U.S. Bankruptcy Court for the Southern District of New York, which was dismissed on Nov. 16. Its Chapter 11 case number is 06-11599.

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