Durango misses payments, hires advisor to work on debt restructuring

New York, Dec. 23 - Corporacion Durango said it failed to make debt payments and has hired Rothschild Inc. and PricewaterhouseCoopers as financial advisors to assist with a debt restructuring.

Durango did not disclose details of the debt payments it had missed but said in a filing with the Securities and Exchange Commission: "Certain payments owed by the company on financial obligations have not been paid in accordance with their terms."

The Durango, Mexico company said the paper industry is in the middle of one of its worst periods ever, noting that pricing for its products dropped by approximately 18% during the last two years.

In addition to industry conditions, Durango said it is suffering from what it described as the 22% overvaluation of the Mexican peso and a high cost of capital.

Durango has also been unable to divest non-strategic assets as planned.

"We intend to pursue a plan that will result in a level of debt and debt service payments that provides the company with greater financial flexibility given today's challenging business environment," said Miguel Rincon, Durango's chairman and chief executive officer, in the SEC filing.

Durango most recently sold $175 million of 13¾% senior notes due 2009 on June 18.

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