Nextel Unit Files for Bankruptcy
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NEW YORK (AP) _ The international unit of the cell phone company Nextel Communications filed for bankruptcy court protection on Friday, detailing an agreement with lenders to reduce its debt by 80 percent.
NII Holdings, which mostly provides wireless services in Latin America, said the proposed reorganization would reduce the company’s debt load from $2.7 billion to less than $500 million.
Nextel has agreed to contribute up to $65 million in new capital to NII, while a consortium of NII bondholders will provide at least $75 million.
In addition, Nextel will give NII $50 million in new funding as part of an existing arrangement under which the companies share wireless spectrum in Mexico and the United States. The agreement also includes a deferral of the principal payments under a loan agreement with Motorola Credit Corp.
As part of the reorganization, Nextel’s stake in NII will be reduced from more than 95 percent to less than 50 percent, with most of the equity transferred to NII bondholders.
Nextel, which earlier this year wrote off more than $1.7 billion in debt it was owed by NII, had warned in its latest quarterly earnings report that NII might be forced to seek bankruptcy protection.
NII, originally known as Nextel International, has operations in Mexico, Brazil, Peru, Argentina, Chile and the Philippines.
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