Vitro Reaches Settlements with Creditors, Pending Court Approval
March 4, 2013

by Penny Stacey, pstacey@glass.com

Vitro S.A.B. de C.V. says that company officials have entered into settlement agreements with creditors and an investment company in hopes of ending all litigation between Vitro and certain creditors in Mexico and the U.S. over the past two years. The agreements will allow the company to complete its restructuring process. The settlement is still pending court approval, according to the company.

Under the settlement agreement, Fintech Advisory Ltd., an investment company, will purchase from the members of the Ad Hoc Group all of their holdings of bonds and pay to the Indenture Trustees and the Ad Hoc Group members an amount to cover fees, costs and expenses incurred by the Indenture Trustees and the Ad Hoc Group members.

In addition, certain members of the settling parties have agreed to grant one another mutual releases which cover, among other things, all claims related to the court proceedings and certain costs and fees, according to a statement from Vitro.
The parties also have agreed to consensually dismiss all suits, actions and appeals between and among them in Mexico and in the United States, according to Vitro.

Under Vitro's agreement with Fintech, the investment firm "will acquire the substantial majority of the bonds from the non-consenting creditors, will relinquish the legal actions against Vitro and its subsidiaries in the U.S. and Mexico associated with these bonds and will consent to the Concurso plan that was approved by the Federal Courts of Mexico, in respect of these bonds and claims."

"These actions will increase the approval rate of such plan to almost 99 percent of the recognized creditors," writes Vitro.

Additionally, Vitro officials say they will cease their collection actions in Mexico for costs and damages against the non-consenting creditors and drop the lawsuits it filed in the U.S., thus ending all legal proceedings against them.

Finally, Fintech will receive shares of a wholly owned subsidiary of Vitro, representing up to 13 percent of its equity and a note for $235 million (U.S. dollars) with a two-year maturity, which will be issued by the subsidiary.

"Fintech's participation was crucial in order to establish the foundation for the agreements we have reached," says Claudio Del Valle, Vitro's chief restructuring officer. "It provided a means by which the non-consenting creditors could exit their positions, and allowed Vitro to gain a new partner in Fintech, which we are sure will add value to the company, as Fintech shares our vision for the business."

Vitro officials had announced in mid-February that they were in talks with creditors. In February 2009, Vitro defaulted on more than $1 billion in bonds. The company completed a Mexican court-approved debt restructuring plan this past February. A Texas court ruled against enforcement of the reorganization in the U.S. in June which led to the appeal.

In other news in the Vitro case, Mexico's First Civil Chamber of the Superior Court of Justice of the State of Nuevo Leon recently ruled in an appeal filed by Pilkington in the Vitro case. Pilkington had filed an appeal in the case alleging that the company's
Extraordinary General Shareholder Meeting of Vitro Plan S.A. de C.V., held December 8-11, 2006, was invalid. The court, however, ruled that the meeting-and the decisions made during the meeting-were valid and has ordered Pilkington to pay legal expenses for the judgment, according to a statement from Vitro.

During the 2006 meeting, Vitro shareholders approved a merger of a Vitro creditor with Viméxico S.A. de C.V. The merger allowed Vitro's flat glass unit to reduce its debt by $135 million (U.S. dollars), but diluted Pilkington's shares, according to Vitro.

The recent ruling confirms the September 19, 2011, ruling issued by the First Court of Concurrent Jurisdiction of the First Judicial District of the State.

Pilkington officials had not yet responded to requests for comment at press time.

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