The company submitted a pre-packaged proposal backed by a majority of its creditors to a court in Culiacan, Mexico, where Homex is based. The plan seeks to “safeguard the long-term viability of the company, while at the same time safeguarding the rights of its creditors,” Homex said yesterday in a statement to the Mexican stock exchange.
Homex’s $400 million of defaulted notes due 2020 rose 0.31 cent to 10.29 cents on the dollar at 11:23 a.m. in New York today, the biggest one-day gain since Jan. 10.
The agreement would allow Homex, formerly the country’s biggest homebuilder by revenue, to obtain financing and restart about 61 housing developments, the company said.
Homex is one of three Mexican homebuilders that defaulted on debt last year amid a shift in government policy to encourage city construction instead of sprawling rural developments. The overhaul left builders bleeding cash and with sizable land inventories that had to be written down in value.
Mexico’s homebuilding industry “continues to be very attractive,” Homex said yesterday, citing a lack of new homes that meet the criteria of new government policies.
The homebuilder is in talks with billionaire Sam Zell for a loan of as much as 1.8 billion pesos ($137.6 million) that would finance the building of as many as 8,000 homes and cover general corporate expenses, according to an April 3 statement.