Maxcom Wins Court Approval of Its Restructuring Plan

Maxcom Telecomunicaciones SAB won court approval of its restructuring plan, which includes a deal with Ventura Capital Privado SA that will probably see the firm take control of the Mexico City-based phone company.

U.S. Bankruptcy Judge Peter J. Walsh at a hearing today in Wilmington, Delaware, approved the pre-packaged reorganization plan less than two months after Maxcom sought court protection. The plan is to be effective next month. No creditors objected.

“We stand before your honor with a fully consensual plan,” Marc Kieselstein, a lawyer for the company, said at the hearing. The case was largely uneventful, having been worked out with creditors before the filing, the judge said.

“I think we have had a monotonous case before your honor, and that’s the way we like it,” Kieselstein told Walsh.

The company said liquidity constraints kept it from upgrading and expanding its network to keep pace with advances in technology, making the restructuring necessary. Maxcom was hurt by the shift to mobile phones from landlines, it said.

Maxcom listed assets of $406.2 million and debt of $243 million in Chapter 11 documents. The telecom provider, with more than 2,000 employees, targets residential and small and medium-sized business customers mainly in Mexico City, Puebla, Queretaro, San Luis Potosi and Tehuacan.

The company reached a restructuring agreement with Ventura Capital, a group holding about $86 million, or 49 percent, of the senior notes and about 44 percent of its equity holders before entering bankruptcy protection, court papers show.

Growth Foreseen

“Maxcom will complete a comprehensive recapitalization and debt restructuring that is expected to significantly reduce Maxcom’s debt service expense and position Maxcom for growth,” the company said in a July 24 statement.

As part of the plan, Ventura Capital agreed to make a $45 million capital infusion and has offered to buy outstanding shares for 2.90 pesos (22 cents) each.

All creditors except senior noteholders will be paid in full, according to court documents. More than 98 percent of the noteholders voted to support the plan before the July 23 bankruptcy filing.

The senior noteholders will get $200 million in new notes with reduced interest and extended maturities to replace their existing $200 million in 11 percent notes, according to the statement. They will also have the right to buy equity that isn’t subscribed in the offering, worth as much as 15 percent of the value of their notes.

The case is In re Maxcom Telecomunicaciones SAB, 13-bk-11839, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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