Volume 45, Issue 12 - December 2010

FinancialFlash

 

Creditors File Petition for Bankruptcy Against Vitro U.S. Subsidiaries

Four Vitro creditors, unhappy with a recent debt settlement offer, filed a petition for involuntary bankruptcy on November 17 against 15 of the company’s U.S. subsidiaries, including Vitro America, according to court documents.

The noteholders own approximately $75 million (about 6 percent), of the Mexico-based company’s debt.

According to a statement issued by Vitro S.A. B. de C.V., it had “commenced a tender offer, exchange offer and consent solicitation in connection with its anticipated prepackaged Concurso plan in Mexico” on November 1.

However, in a statement issued later by the noteholders involved in the filing, the creditors “believe that Vitro’s solicitation does not offer adequate consideration to the noteholders.”

“We believe Vitro’s plan significantly undervalues the company, undercounts the amount and ratable portion of the noteholders’ claims, and inappropriately redistributes value away from noteholders to Vitro’s shareholders and insiders,” wrote the creditors in the statement.

Vitro chief restructuring officer Claudio Del Valle, however, is optimistic that the situation will be resolved, according to a company statement.

Vitro officials say the court has made several decisions in its favor, including the denial of a motion by the bondholders who filed the case seeking to restrict the U.S. subsidiaries’ ability to enter into transactions with their non-U.S. affiliates or participate in Vitro SAB’s planned restructuring and concurso proceeding in Mexico. In addition, the court has approved a motion by Vitro’s U.S. subs for continued financing with their lender, Bank of America, and granted in part a motion authorizing the U.S. subsidiaries to obtain additional financing from their ultimate parent, Vitro SAB, according to the company.

In the meantime, it is “business as usual” for Vitro America, according to president Arturo Carrillo. “Consistent with applicable law, the company will continue to operate its business in the ordinary course, with full authority to fulfill its contractual and financial obligations,” Carrillo says.

As for employees, they should remain unaffected as well, Carrillo says. “We currently have no layoffs planned and intend to continue paying our employees’ wages, salaries and benefits in the ordinary course.”
www.vitroamerica.com



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