UPDATE 2-Mexico homebuilder Geo files for bankruptcy

viernes 21 de marzo de 2014 00:25 GYT

* Geo says majority of creditors support bankruptcy plan

* Plan will give bondholders 88 percent of company stock (Adds details on restructuring agreement)

MEXICO CITY, March 20 (Reuters) - Troubled Mexican homebuilder Geo said on Thursday it has filed for bankruptcy after gaining the support of the majority of its creditors in a deal that will replace most of its debt with stock.

Geo was once Mexico's biggest homebuilder with sales of 55,485 homes in 2012, but it has struggled with a heavy debt load and slumping home sales that pushed it to stop making debt repayments last year.

Creditors Banamex, HSBC, Banorte, Santander, Inbursa and BBVA Bancomer agreed to the bankruptcy plan, Geo said in a statement on Thursday. The deal is a so-called prepackaged bankruptcy that can shorten the duration of the legal process.

In a separate statement, the company said it reached a deal with holders of more than 50 percent of its debt, including a group of investors who hold just over 27 percent of bonds due on Sept. 25, 2014, June 30, 2020 and March 27, 2022.

Under the restructuring plan, bondholders will end up with 88 percent of the company in stock, current stockholders will be diluted to an 8 percent stake while management will hold 4 percent of stock.

The deal also includes a plan to issue 4.75 billion Mexican pesos ($358 million) in new stock in the company once the restructuring is complete.

Orlando Loera, one of Geo's advisers, said in a telephone interview that the proceedings could be finished within four to six months. He said most of the company's debt would be converted into stock with another part restructured into debt that will mature in between seven to 10 years.   Continuación...