Maxcom Telecomunicaciones Plan Effective


Maxcom Telecomunicaciones’ First Amended Joint Plan of Reorganization became effective, and the Company emerged from Chapter 11 protection. The Court confirmed the Plan on September 10, 2013. According to the documents filed with the Court, “Under the Plan, subject to the conditions set forth in the recapitalization agreement and the restructuring and support agreement, Maxcom Telecomunicaciones will complete a recapitalization and debt restructuring that is expected to significantly reduce its debt service expense and position the Company for growth with a $45 million capital infusion. The Plan’s restructuring of the Company’s funded debt obligations and the parallel out-of-Court transactions (i.e., the proposed tender offer and new capital contribution) to be effectuated in accordance with applicable Mexican and United States law will enable Maxcom Telecomunicaciones to emerge from Chapter 11 with a sustainable balance sheet and a new capital contribution from the new owners of a substantial portion of the Company’s equity. This capital will permit the Debtors to continue to upgrade and expand their telecommunications network. All classes of creditors are unimpaired and will be paid in full under the Plan, except for the senior notes claims, which will receive (1) the step-up senior notes (which include the capitalized interest amount for unpaid interest accrued on the senior notes from (and including) April 15, 2013 through (and excluding) June 15, 2013, at the rate of 11% per annum), (2) cash in the amount of unpaid interest accrued on the senior notes (A) from (and including) December 15, 2012 through (and excluding) April 15, 2013, at the rate of 11% per annum, and (B) from (and including) June 15, 2013 through (and excluding) the effective date of the Plan at the rate of 6% per annum and (3) rights to purchase equity that is unsubscribed by the Company’s current equity holders pursuant to the terms of the Plan. The step-up senior notes will (a) be issued in an aggregate principal amount of $200 million, minus the amount of senior notes held in treasury by the Company, plus the capitalized interest amount; (b) bear interest (i) from the date of issuance until June 14, 2016, at the annual rate of 6%, (ii) from June 15, 2016 until June 14, 2018, at the annual rate of 7% and (iii) from June 15, 2018 until the maturity date, at the annual rate of 8%; (c) have a maturity date of June 15, 2020; (d) be secured by the same collateral that currently secures the senior notes and (e) be unconditionally guaranteed, jointly and severally and on a senior unsecured basis, by all of Maxcom Telecomunicaciones’s direct and indirect subsidiaries, excluding Fundacion Maxcom, A.C.” This telecommunications services provider filed for Chapter 11 protection on July 23, 2013, listing $400 million in pre-petition assets.

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