Grupo Iusacell plans to issue $175 million 10% notes on Dec. 31 under plan note exchange

By Caroline Salls

Pittsburgh, Nov. 28 - Grupo Iusacell Celular, SA de CV plans to issue $175 million of 10% senior secured notes due 2013 on Dec. 31 in exchange for its 14¼% senior notes due 2006 under its plan of reorganization, according to a T-3 filing with the Securities and Exchange Commission.

From April 18, 2006 to June 1, the company solicited consents to exchange the existing notes, and holders of about 89% 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 $175 million principal amount of 10% notes to be issued on Dec. 31 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 under the Mexican Business Reorganization Act.

If the plan is approved by the Mexican court, $350 million of the outstanding existing notes will be cancelled and the holders of the existing notes will receive $500 principal amount of notes for each $1,000 principal amount of existing notes previously held.

On the date on which the new notes are issued, noteholders will also receive an additional cash payment equal to the interest that would have accrued on $500 of notes from Jan. 1, 2006 to whichever of June 30 or Dec. 31 that immediately precedes the issue date if the $500 of notes had been issued on Jan. 1, 2006.

In addition, the company may elect to capitalize up to 40% of its restructuring payment, in which case the principal amount of notes issued will be increased, on a dollar-for-dollar basis, by the capitalized amount.

Noteholders may receive an additional cash payment, the amount of which will depend on the per share price of the shares of common stock of the company offered to all of its shareholders in order to increase its outstanding common stock for the purpose of constituting the collateral that will secure the notes and the exercise by its shareholders of their rights.

Any amount paid to holders of the notes under the Mexican rights offering will decrease the principal amount of notes issued 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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