Paraguayan cellular service provider closes US$73.2 million debt restructuring

Paraguayan cellular service provider Núcleo S.A., a subsidiary of the Argentine cellular service provider Telecom Personal S.A., has successfully restructured its US$73,200,000 financial debt with syndicated lenders Australia and New Zealand Banking Group Ltd, ING Bank N.V. - Curacao Branch, Citibank N.A. International Banking Facility and Marathon Master Fund, bilateral lenders Citibank N.A. Sucursal Paraguay, Citibank N.A. International Banking Facility and ING Bank N.V. - Curacao Branch, and Paraguayan lenders Banco Bilbao Vizcaya Argentaria Paraguay S.A. (BBVA), Banco Sudameris Paraguay S.A.E.C.A., Banco Interbanco S.A., Lloyds TSB Bank plc y Multibanco S.A. Emisora de Capital Abierto (En Liquidación). The transaction closed on November 22.

?The most challenging component of this transaction was dealing with the complications of coordinating the various conflicting interests of the numerous parties involved,? Juan M. Diehl Moreno, of Marval, O?Farrell & Mairal told LATIN COUNSEL: ?As Núcleo and Telecom Personal's financial debt restructuring process are tightly linked, the closing of Núcleo's transaction will permit Telecom Personal to successfully complete its debt restructuring shortly.?

The deal consisted of restructuring agreements -one for the syndicated lenders, one for the Paraguayan lenders and one for each of the bilateral lenders-. As part of the transaction, Núcleo made an up-front payment to the syndicated and bilateral lenders of $10.6 million and a payment of accrued and unpaid interest (excluding penalties), and Telecom Personal made an up-front payment to the syndicated lenders of $4.2 million in consideration of the cancellation of the original guarantee granted by Telecom Personal. Núcleo also granted a collateral over certain account receivables.

For the remaining amount of debt, Núcleo negotiated an extension and an interest rate reduction:

- For the syndicated and bilateral lenders, the interest rate will be libor + 4.5 per cent. The last payment will be made in 2008.

- For the Paraguayan lenders, the interest rate will be 7.125 per cent. The last payment will be made in 2008.

Núcleo was advised in Paraguay by Fiorio & Alvarado through partner Marcelo Alvarado.

Marval, O?Farrell & Mairal, through partner Santiago Carregal and senior associate Juan M. Diehl Moreno, advised Núcleo and Telecom Personal in Argentina.

Núcleo and Telecom Personal were represented in New York by Davis Polk & Wardwell through partner Julia Cowles and associate Aya Horikoshi.

Estudio Jurídico Gross Brown advised the lenders in Paraguay, through partner Jorge Gross Brown.

In the U.S., the lenders were advised by Linklaters through partner Conrado Tenaglia and associates Eileen Fitzsimons and Celeste Pozo.

Morgan Stanley and MBA Banco de Inversiones S.A. provided financial advisory services to Núcleo and Telecom Personal S.A.