Can Eduardo Bours Get Mexico's Banks And Debtors To Agree?
Eduardo Bours softpedals the toughness of his job, but the 39-year-old businessman is under enormous pressure. Bours, heir to a prosperous family poultry-raising business, has been tapped to work out deals between Mexico's banks and some of their biggest corporate debtors. "You need common sense and a cool head," says Bours, coming up for air after a long day.
Bours, who has a strong reputation as a business troubleshooter, has his work cut out for him. Talks between banks and many corporate borrowers are at a stalemate. Billions of dollars' worth of loans are going unserviced. Until the debt problem is straightened out and bank lending resumed, the prospects of a strong economic recovery will remain bleak. "One thing impeding recovery is that the relationship between the banks and bigger borrowers is very tense," says Lacey Gallagher, an analyst at Standard & Poor's in New York.
TRUSTED. Bours has the advantage of being trusted by both the banks and their customers--largely thanks to the work he did last year in rescuing Del Monte Fresh, a Mexican-owned produce concern that collapsed in 1994 amid financial scandal. He also earned plaudits for his management of Bachoco, a poultry giant owned by his family, that has now been turned over to professional managers.
Bours, who doesn't receive a salary from the government, operates out of handsomely furnished offices lent by Banca Serfin, Mexico's third-largest bank. He has a team of four, chosen from the Mexican financial world and Lehman Brothers Inc. His targets are Mexico's biggest problem debtors--about 35 companies, each with debts of $100 million or more. His tactics are tough: He tries to force banks and borrowers to meet continuously until they reach an agreement. He brushes off stalling tactics with curt orders to keep talking. And he says that his good relationship with Finance Secretary Guillermo Ortiz helps step up the pressure. "The idea is that everyone concedes something," Bours says.
The strategy worked last December when Bours needed only one week to restructure $120 million owed by Grupo Costamex, a tourism company. Insiders say Bours smashed through the bank bureaucracy that was holding up the deal. He also used debt-equity swaps to restructure $440 million owed by bottle-top maker Grupo Zapata.
CONTROVERSIAL. Bours's main aim is to keep companies afloat and minimize job losses. He says he won't deal with a company unless it is viable and is willing to give up equity to creditors. Bours's biggest challenge so far has been to hammer out a plan for restructuring $2.1 billion in debt owed by Grupo Sidek, a steel and tourism conglomerate. But this project is turning controversial. Three days after Sidek announced it had reached agreement with 17 Mexican banks on $1.5 billion in debt, the company defaulted on a $20 million Eurobond. Fending off suggestions that the Mexican banks were getting favored treatment, Bours says Sidek is "not looking for debt forgiveness or reduction." He says the company wants time to raise money through asset sales. But Bours has to be careful that a Sidek pact does not hurt other companies' foreign borrowing prospects.
While most of the Mexican business community applauds Bours's efforts, the government is still taking flak for not doing enough. A major problem is that the government is trying to avoid having the taxpayers finance his deals, which limits his room to maneuver. One proposal being floated, however, involves swapping Brady bonds for corporate debt, but officials have just begun to study it.
Thousands of smaller companies below Bours's radar screen also need help with their debt. The government has come up with a $650 million rescue program for these companies. But this program likely will be used for only about 400 companies, mostly medium-size concerns employing 100 to 250 people.
Government officials say this program, Bours's mediation, and previously announced $10.8 billion in bailouts for consumers and the banks may be enough to give Mexico a push in the right direction. Just about everyone doing business in Mexico hopes so.