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Mexico's ICA eyes pre-pack bankruptcy for some units

The construction company plans to file a pre-packaged bankruptcy for some units, exit its international business and sell its homebuilding operations as it seeks to restructure, according to Reuters.

(Photo: Archive/El Universal)
English 30/04/2016 10:57 Reuters Actualizada 10:57
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Mexico construction company ICA plans to file a pre-packaged bankruptcy for some units, exit its international business and sell its homebuilding operations as it seeks to restructure, according to a document seen by Reuters.

The document, which outlines minutes of a meeting this month at which Chief Financial Officer Pablo García discussed the plans, said the builder hoped to conclude negotiations with bondholders in August or September.

ICA said in a filing with the stock exchange late on Friday that "reports published by diverse media outlets are speculative in nature," adding that the company had previously announced it is in the process of analyzing a restructuring plan.

Shares of ICA rose as much as 3.7 percent after Reuters reported the plans, but the stock reversed gains in late afternoon trading to end down 2.1 percent at 3.68 pesos.

Two people familiar with the matter confirmed that the company, whose formal name is Empresas ICA S.A.B. De CV, was aiming for a pre-packaged bankruptcy for some of its subsidiaries.

In a pre-packaged deal, a company and creditors reach a restructuring agreement prior to the bankruptcy filing to speed up the legal process.

ICA has declined to comment specifically on whether it was pursuing such a strategy, or on the contents of the document, which also revealed other parts of its turnaround plans.

ICA, which held a shareholder meeting on Friday, has not posted a profit since 2013 and has defaulted on about $60 million in interest payments since December. It has been hit by a hefty dollar-denominated debt load and insufficient new work.

ICA hired financial advisory firm Rothschild in October and promised to release a restructuring plan by mid-February but has yet to shed light on the scheme. A boardroom shakeup, however, has been rapid.

García replaced Gabriel de la Concha as CFO in December, while Chief Executive Alonso Quintana Kawage, grandson of ICA's founder, stepped down amid mounting pressure from the board in February. Co-CEO Alfonso Gonzalez Migoya resigned in March, just three months after his appointment.

The meeting minutes disclosed in the document seen by Reuters said the government has also gotten involved with the corporate reshuffle. "The government has expressed the need to ... make changes in management. That has led to changes in the company's executives that have been observed since December of last year," it read.

Neither Mexico's presidency nor the finance ministry responded to requests for comment.

ICA has also undertaken asset sales, including a proposed deal for a 1.5 billion-peso investment from real estate group Nemesis Capital for a venture with ViveICA, ICA's homebuilder. However, the minutes, which put ViveICA's equity value at around 250 million pesos, show the Nemesis deal has fallen through.

The company has also begun selling assets in Panama, Peru and the United States to slim down, the document showed.

It aims to sell minority stakes to investment vehicles known as CKDs and private equity firms to help finance concessions it has won and is not currently seeking more, it added.

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