(Updates with comments from company official; adds details)
By Anthony Harrup Of DOW JONES NEWSWIRES
MEXICO CITY (Dow Jones)--Mexican glass maker Vitro SAB (VITRO.MX) said Monday it has launched two offers--a proposed swap and partial buyback--of three series of defaulted notes for $1.22 billion as it seeks to restructure its debt.
In a filing with the Mexican stock exchange, Vitro said the offers are aimed as a step toward achieving a debt restructuring which would be carried out under the Mexican equivalent of Chapter 11.
The offers apply to $300 million in notes due 2012, $216 million in notes due 2013, and $700 million in notes due 2017. Vitro defaulted on the notes in 2009.
The company said the buyback offer, for which $100 million would be available, would be conducted under a modified Dutch auction with a price range of $500 to $575 per $1,000 in principal.
Vitro is also launching a bond swap offer and consent solicitation that includes the $1.22 billion and other debt, under which it's offering to issue $850 million in 2019 notes, $100 million in convertible notes for a 15% stake in Vitro, and $75 million in cash.
Under the swap offer, for each $1,000 exchanged, holders would receive $562 in 2019 notes, $66 in convertible notes and a proportional part of the cash payout, Vitro said.
Vitro, which has seen several previous restructuring offers rejected by creditors, said its largest single creditor, Fintech Advisory Ltd., has agreed to support the latest proposal. However, a group of holders of more than $500 million in Vitro notes has said since late September that they oppose the anticipated offer and consent solicitation.
Claudio del Valle, Vitro's head of restructuring, said in a conference call with reporters that the company hopes the bankruptcy filing, which will be accompanied by a Chapter 15 filing in the U.S., will be with a pre-arranged restructuring.
He said bondholders opposed to the deal could choose not to participate, but couldn't block the process, which needs a simple majority of creditors on board to go ahead. He estimated that Fintech has about $230 million to $240 million in Vitro debt, including about $177 million in derivatives debt recently recognized by the company.
The opposing bondholders steering group said in a statement last week that it expected the swap and initial consent solitication to offer "an unacceptably poor economic outcome for noteholders," and encouraged holders to reject it. The steering group said it was in contact with holders of an additional $300 million in bonds.
Representatives for the advisers to the steering group--White & Case LLC and Chanin Capital Partners LLC--weren't immediately available to comment Monday.
Vitro fell into trouble paying its debts as the 2008-2009 global economic downturn affected its earnings, and the company also made big losses on derivatives.
Del Valle said the company remains cautious about the recovery. While the auto industry, for which it supplies glass, has rebounded this year, construction in the U.S. and Spain remain sluggish. Glass containers sales volumes have improved, although competition has led to downward pressure on prices and profit margins, he added. Vitro reported sales of $1.79 billion in the 12 months ended June 2010.
Vitro shares trading on the Mexican stock exchange rose 12% Monday to MXN13.93.
-By Anthony Harrup, Dow Jones Newswires; (5255) 5980-5176; anthony.harrup@dowjones.com
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