Corp. Geo SAB, Mexico’s second-biggest homebuilder by revenue, said its main bank creditors have agreed to cooperate in a debt restructuring, sending the shares up the most on the country’s benchmark stock index.
The shares jumped 7.1 percent to 5.28 pesos as of 10:11 a.m. in Mexico City, the most among 35 companies on the benchmark IPC index. Bonds due in 2022 rose 0.8 cent on the dollar to 41.65 cents, the highest level since May 21 on a closing basis, according to data compiled by Bloomberg. The IPC was little changed.
Geo’s main bank creditors won’t take legal action against the Mexico City-based company under the so-called standstill agreement and will suspend any claims already initiated, according to a regulatory filing yesterday after the market closed. The agreement is valid until Sept. 3, Geo said.
“It’s a step in the right direction,” Carlos Hermosillo, an equity analyst with Grupo Financiero Banorte SAB, said in a telephone interview from Mexico City. “Anything showing you’re moving forward will be taken well by the market.”
Mexico’s biggest publicly-traded homebuilders have missed debt payments and defaulted on derivatives trading contracts after a shift in government policy to promote more capital-intensive apartments in cities depleted cash. Geo defaulted on a 2.3 million peso ($178,000) bond payment due in April 26 after cash fell by 84 percent in the first quarter.
In a separate filing yesterday, Geo said it hired Rothschild as an adviser to restructure its debt.
Shares of Urbi Desarrollos Urbanos SAB, a Geo competitor that’s evaluating its own debt restructuring, advanced 6 percent today. Urbi said yesterday in a regulatory filing it’s in talks with its banks to agree on a standstill.