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Corporacion Durango noteholders to get new bonds, stock
By Jeff Pines
Washington, Dec. 29 - Corporacion Durango SA de CV noteholders will get bonds and stock in the reorganized company, according to the Mexican containerboard and paper company's reorganization plan filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.
In its motion, Durango asked the court to give it and its subsidiaries permanent protection from creditors who might try to sue them in U.S. courts.
According to the plan, noteholders will get 85% of their claim in new bonds due Dec. 31, 2012. The bonds will pay quarterly interest with the interest rate in 2005 starting at 7½%, then increasing to 8½% and then stepping up to 9½% from 2007 to 2011.
The remaining 15% of their claim as well as 15% of the unsecured bank claims will be repaid through series B stock representing a 16.997% stake, or 18.81 million shares, in the reorganized company.
The other 85% of the unsecured bank debt will be repaid in 32 consecutive quarterly installments at Libor plus 275 basis points through a restructured credit agreement. The bank creditors are Banco Nacional de Mexico, JPMorgan Chase Bank, California Commerce Bank, Bank of America, Bank of America Mexico, Banc of America Securities and Deutsche Bank.
The bank and note debt will be secured through guarantees from Durango's subsidiaries, mortgages and pledges over other assets.
Mexican law requires at least half of the creditors to support the reorganization. Durango said it has the support of about 64% of its creditors.
A copy of the reorganization plan was filed with the Securities and Exchange Commission, the company said.
Durango expects the Durango District Court to approve the reorganization around Jan. 20.
The company filed for protection from U.S. creditors on May 20, 2004. Its Chapter 11 case number is 04-13487.
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