Chilean Bus Operator Alsacia Says Government Rejects Bond Accordby
Forbearance agreement with bondholders expired yesterday
Says government blocked deal it had reached with creditors
Inversiones Alsacia SA, the Chilean bus operator that missed a payment on overseas bonds in June, said the government rejected an agreement it reached with creditors that would have allowed the company to avoid litigation.
Alsacia, the largest private operator in the capital’s Transantiago public transport system, said in a statement that a 90-day forbearance agreement with creditors ended yesterday. While it had worked out a deal with bondholders that would have included giving them the company’s bus terminals, it needed the government’s approval for it to take effect.
The statement didn’t say why the government didn’t endorse the deal. Alsacia first issued $464 million in seven-year dollar bonds in 2011, which it then restructured in 2014 amid a slump in revenue as the government repeatedly fined the company for failing to meet service standards. Alsacia has attributed its problems to the government’s refusal to revise its contract amid weakening demand and a lack of infrastructure investment.
In 2007, Michelle Bachelet, then in her first term as Chile’s president, oversaw the launch of the Transantiago public transport initiative, which revamped the capital’s bus and subway system. But it has been plagued by problems, such as high levels of fare evasion and slowing average speeds because of increasing traffic. Subus Chile SA, a peer of Alsacia, recently declared bankruptcy.
Alsacia’s dollar bonds are trading near 5.63 cents to the dollar, according to prices provided by Bloomberg.