Maxcom plans debt restructuring

New York, Jan. 31 - Maxcom Telecomunicaciones SA de CV said holders of 56% of its outstanding senior notes have agreed to a debt restructuring and the Mexico City-based telecommunications provider will now solicit other bond investors.

The proposed restructuring will cut the company's debt by 36% to $175 million and reduce annual debt service by $38 million over each of the next four years.

In addition to the debt restructuring, Maxcom said a group of investors led by some of the existing shareholders will invest up to $70 million in additional equity capital to fund ongoing capital expenditure and customer acquisition costs.

Under the proposed restructuring, Maxcom's outstanding $275 million of 13¾% senior notes due 2007 will be exchanged for $175 million principal amount of senior notes due March 1, 2007. These notes will pay no interest through March 1, 2006 and pay 10% in the final year.

Maxcom will also issue new series A convertible preferred stock to bondholders on completion of the exchange. The preferreds will be convertible into 15% of Maxcom's equity before dilution of existing options and warrants.

As part of the exchange offer, the company will solicit consents to amend the note indenture to eliminate substantially all the restrictive covenants and certain events related to default.

If the exchange is completed before April 1, 2002, the next interest payment date, bondholders will also have the option to receive either cash equal to the coupon payment or additional new series A convertible preferreds.

Maxcom will cancel the $25 million of its notes that it repurchased during 2001.

The new equity will be invested in exchange for new series B convertible preferred stock which will be exchangeable for 77.5% of Maxcom's equity. The $70 million investment is subject to completion of the note exchange and will be in two tranches, $50 million on completion of the exchange and $20 million during the following year at the company's choice.

The restructuring is subject to exchange of at least 95% of the outstanding senior notes and Mexican regulatory approvals.

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