Iusacell loses bid to throw out bondholder lawsuit, bondholders say

By Jeff Pines

Washington, July 23 - Grupo Iusacell SA de CV's effort to get a lawsuit over $150 million in defaulted bonds thrown out of court failed, the managers of the accounts and funds holding the bonds said.

Judge Bernard Fried's July 21 ruling allows holders of around a fifth of the $150 million Iusacell Celular notes to pursue their claims in New York State Supreme Court, including specific performance claims against Iusacell such as the granting of first priority liens on a pari passu basis with other lenders.

Earlier this month, Grupo Iusacell, SA de CV said the Supreme Court in New York Country denied a request by some holders of its senior notes due 2004 that the company be preliminarily enjoined from selling or otherwise transferring certain assets.

The noteholder action was in connection with a lawsuit filed in January 2004 against Iusacell's subsidiary Grupo Iusacell Celular, SA de CV, the Mexico City-based wireless phone company said. The lawsuit can now proceed.

The bondholders involved in the lawsuit include funds and accounts managed by Gramercy Advisors LLC, TCW Asset Management Co., TCW Investment Management Co. and Agave Telecom Holdings LLC.

"The Mexican press recently quoted an Iusacell officer, director general Gustavo Guzman, stating that the company would rather 'invest in technology than pay debt.' With that kind of attitude, it is clear that creditors have little recourse but to pursue the remedies provided under our bond indenture as governed by New York law," said Robert Rauch, managing director of Gramercy Advisors, said in a press release.

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