Mexican glassmaker Vitro SAB said a judge in Monterrey gave final approval to restructure $1.5 billion of defaulted debt over the objections of U.S. creditors.
The approval by Judge Sandra Lopez concludes a three-year legal battle in Mexico that began when the nation’s largest glassmaker defaulted on debt, including $1.2 billion of U.S. bonds. Lopez let $1.9 billion of intercompany loans that Vitro created after the default be included in the vote, which ended up 74 percent in favor of the refinancing plan.
U.S. noteholders, including Elliott Management Corp., opposed the plan in Mexican and U.S. courts, arguing that the inclusion of intercompany debt let Vitro dictate restructuring terms. Vitro failed to make its debt payments in February 2009 after construction and auto glass sales plunged during the U.S.’s worst recession since the 1930s. The San Pedro Garza Garcia, Mexico-based company also incurred $340 million of derivative losses in bad bets on natural gas and currencies.
The refinancing plan, which was presented by a court-appointed arbitrator and based on Vitro’s proposal, swaps the defaulted debt for $814.6 million of new bonds maturing in 2019 with an interest rate of 8 percent and $95.8 million of debt convertible to shares with an interest rate of 12 percent.