UPDATE 3-Nextel carrier NII files for bankruptcy protection as debt soars
(Adds details from court filing and statement from Aurelius)
By Guillermo Parra-Bernal and Brad Haynes
SAO PAULO, Sept 15 (Reuters) - NII Holdings Inc, the parent of Nextel operators in Latin America, filed for U.S. bankruptcy protection on Monday after struggling for years with debt, fierce competition in Brazil and Mexico, and a dispute with a U.S. hedge fund.
The company filed a voluntary petition for so-called Chapter 11 in U.S. Bankruptcy Court in New York, according to a filing.
The decision should allow Reston, Virginia-based NII Holdings to restructure debt with creditors by turning them into shareholders, sources with direct knowledge of the situation said. NII Holdings operates in several countries in Latin America under the Nextel brand.
The Chapter 11 filing could also help the company implement a more sustainable business model with a focus on Brazil and Mexico, its main markets. Chapter 11 is a form of bankruptcy that protects a company from its creditors while it reorganizes its business affairs and assets for a limited period.
NII said in court documents that it had received a notice in March from Aurelius Capital Management alleging it had defaulted on $500 million of unsecured notes. The hedge fund, known for its battles with Argentina over that country's defaulted bonds, argued a 2009 restructuring of NII's unsecured notes constituted fraudulent transfers.
Aurelius said it had presented a plan to NII that would convert the company's debt into equity and raise fresh capital by selling new stock in the company, while deferring some disputes until after NII emerged from bankruptcy.
Aurelius said in a statement its plan was opposed by a larger faction of noteholders. Continuación...