MEXICO CITY, April 28 /PRNewswire-FirstCall/ -- Grupo Iusacell, S.A. de C.V. (BMV: CEL), reported an increase of 32% in revenues for the first quarter of 2006.
Recent Events
Iusacell reaches an agreement to Restructure its Debt.
On January 23, 2006, Grupo Iusacell, S.A. de C.V. (Iusacell) and its main operating subsidiary Grupo Iusacell Celular, S.A. de C.V. (Iusacell Celular) announced that they have reached an agreement in principle with the majority of their respective creditors to restructure their indebtedness.
Grupo Iusacell, S.A. de C.V.
Iusacell reached an agreement in principle with creditors representing a majority of the principal amount of its US$350 million 14.25% notes due in 2006 (the "Existing Notes") to exchange such notes for new notes.
The new notes to be issued in exchange for the existing notes will be in a principal amount of US$175 million and will bear interest at an annual rate of 10% with semi-annual interest payments in arrears (with Iusacell having the option to capitalize up to 40% of each interest payment) (the "New Notes"). The maturity date for the New Notes will be December 31, 2013. It is contemplated that the New Notes will be secured by a pledge on Iusacell shares, representing between 28% and 34% of the fully-diluted common stock of the Company. The granting of the pledge will be subject to certain terms and conditions.
The Existing Notes could be exchanged for the New Notes in the terms described above. The Majority Creditors have agreed, subject to certain conditions, including the negotiation of definitive documentation and the achievement of various milestones, to timely tender their debt and consent to the modification of certain terms and conditions of the Notes, pursuant to the contemplated debt exchange offer and consent solicitation and other related transactions. All Existing Notes tendered in the exchange offer will be cancelled upon the consummation of the transaction, and past due interest on the Existing Notes, will be forgiven.
On April 18, 2006, Iusacell launched a solicitation of consents to exchange any and all of Existing Notes for 10.00% senior secured notes due 2013, and amend certain terms and conditions, waive certain existing defaults as well as rescind acceleration under the indenture governing the Existing Notes.
Consummation of the offer is subject to certain customary conditions. The offer is only made, and copies of any documents related thereto will only be made available, to holders of Existing Notes that certify to Iusacell that they are eligible to participate in the offer.
The exchange offer will expire at 5:00 PM, New York City Time, on May 18, 2006, unless extended by Iusacell.
The Information and Exchange Agent for the exchange offer is Bondholder Communications Group. The Information and Exchange Agent can be reached by email at
Grupo Iusacell Celular, S.A. de C.V.
Grupo Iusacell Celular, S.A. de C.V. reached an agreement in principle with creditors representing the majority of its secured debt also involving an exchange of the existing secured debt.
The agreement in principle contemplates that the US$190 million Existing Tranche A loan be exchanged for US$190 million new first lien notes. Main terms of the new first lien notes would include a first lien on substantially all of Iusacell Celular's assets, in the terms and conditions of the existing lien, with interest at Libor + 400 basis points, payable quarterly.
Further, under this agreement the US$76 million Existing Tranche B loan and USD$150 million existing senior notes would be exchanged for approximately US$203 million of new second lien notes. Main terms of the new second lien notes include a second lien on substantially all of the assets of Iusacell Celular, under the terms and conditions of the existing lien, interest at 10% per annum with semi-annually payments (the Company will have the option to capitalize up to 30% of each interest payment). All existing senior notes tendered in the exchange offer will be cancelled upon the consummation of the transaction, and past due interest on the existing senior notes, will be forgiven.
The New Notes, the New First Lien Notes and the New Second Lien Notes will be issued pursuant to an exemption from the registration requirements of the Securities Act of 1933. The exchange offers may be consummated as voluntary exchanges or through any other legal means available to the Company and Iusacell Celular, under applicable insolvency and business reorganization laws.
Consolidated Financial Results
Revenues
Revenues in the first quarter of 2006 grew 32% to Ps$1,811 million, compared to Ps$1,377 million in the same period 2005. The increase is primarily due to growth in postpaid revenues mainly due to an increase in the subscriber base, as well as higher revenues from value added services and increase in air time sales. Grupo Iusacell closed the first quarter of 2006 with 1.91 million subscribers.
Costs and Expenses
Total costs increased during this quarter by 62% to PS$1,101 million, compared to PS$681 million in first quarter 2005. Operating expenses increased by 3% to PS$435 million, compared to PS$420 million in first quarter of the previous year. The increase in total costs for the first quarter 2006 derives mainly from the increase in costs related to handset subsidies, increase in the cost for value-added services and technical expenses.
The increase in operating expenses for this quarter mainly reflects increases in salaries due to increases in the number of full-time and part- time employees, as well as the creation of regional sales structures and customer care in keeping with our strategy of providing the best service for our customers, maintenance fees and costs, offset by the reduction in advertising expenses.
Operating Income Before Depreciation and Amortization
Iusacell's Operating Income Before Depreciation and Amortization for the quarter was PS$275 million, in line with the PS$276 million registered for the same period the year before.
Net Income
Iusacell registered a net loss of Ps$491 million for the first quarter 2006, compared with a net loss of Ps$377 million registered for the same period in 2005, reflecting an increase of 30% generated mainly by an increase
in integral financing costs affected mainly by the exchange loss derived from the increase in exchange rates of the peso against the dollar.
CAPEX
During the first quarter of 2006, the Company made investments of approximately US$11 million, applied mainly to the expansion of coverage and capacity of Iusacell's 3-G network and EV-DO services (Evolution Data Only).
THIS PRESS RELEASE IS NOT AN OFFER FOR SALE OF THE SECURITIES IN THE UNITED STATES, MEXICO OR IN ANY OTHER JURISDICTION, AND NONE OF THE SECURITIES TO BE ISSUED PURSUANT TO THE EXCHANGE OFFER, IF CONSUMMATED, MAY BE SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR IN ANY OTHER JURISDICTION WHERE SUCH SALE IS PROHIBITED. THE COMPANY DOES NOT INTEND TO REGISTER ANY OF THE SECURITIES TO BE ISSUED PURSUANT TO THE EXCHANGE OFFER IN THE UNITED STATES OR TO CONDUCT A PUBLIC OFFERING OF SUCH SECURITIES IN ANY JURISDICTION OTHER THAN THOSE AS IT MAY FROM TIME TO TIME PUBLISH.
Contacts:
Jose Luis Riera K. J. Victor Ferrer V.
Chief Financial Officer Finance Manager
Grupo Iusacell S.A. de C.V. Grupo Iusacell S.A. de C.V.
+011-52-55-5109-5927 +011-52-55-5109-5273
About Iusacell
Grupo Iusacell, S.A. de C.V. (Iusacell, BMV: CEL) is a wireless cellular and PCS service provider in Mexico with a national footprint. Independent of the negotiations towards the restructuring of its debt, Iusacell reinforces its commitment with customers, employees and suppliers and guarantees the highest quality standards in its daily operations, offering more and better voice communication and data services through state-of-the-art technology, such as its new 3G network, throughout all of the regions in which it operates.
Legal Disclaimer
Grupo Iusacell, S.A. de C.V. quarterly reports and all other written materials may from time to time contain statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. A discussion of factors that may affect future results is contained in our filings with the Securities and Exchange Commission.
Attached are the Consolidated Income Statements of each of Grupo Iusacell, S.A. de C.V. and Grupo Iusacell Celular, S.A. de C.V. for the three-month period ended March 31, 2006, and the Consolidated Balance Sheet of Grupo Iusacell, S.A. de C.V. and Grupo Iusacell Celular, S.A. de C.V. at March 31, 2006.
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
MILLIONS OF MEXICAN PESOS OF MARCH 31, 2006 PURCHASING POWER
(UNAUDITED FIGURES)
QUARTERLY INCOME STATEMENT 1Q05 1Q06 Change
Gross Revenues 108% 1,482 106% 1,923 441 30%
Commissions (8%) (105) (6%) (112) (7) (7%)
Net Revenues 100% 1,377 100% 1,811 434 32%
Cost of services 44% 602 44% 788 186 31%
Handset Subsidy 6% 79 17% 313 234 297%
Total Cost 49% 681 61% 1,101 420 62%
Gross Profit 51% 696 39% 710 14 2%
Operating Expenses 31% 420 24% 435 15 3%
Depreciation and
Amortization 29% 398 22% 397 (0) (0%)
Total Expenses 59% 818 46% 832 14 2%
Operating Loss (9%) (122) (7%) (122) (0) (0%)
Operating Profit before
Depreciation and
Amortization 20% 276 15% 275 (0) (0%)
Loss from sale of fixed
assets and other expenses (2%) (34) 9% 155 188 560%
Comprehensive Financing Cost
Interest Expense - Net (20%) (274) (16%) (286) (11) (4%)
Exchange gain (loss) (1%) (20) (18%) (327) (306) (n.m.)
Gain from net monetary
position 6% 86 5% 87 1 2%
(15%) (209) (29%) (525) (316) (151%)
Loss befores taxes (26%) (364) (27%) (492) (128) (35%)
Tax Provisions (1%) (14) (0%) (0) 14 98%
Equity in income (loss) of
subsidiaries 0% -- (0%) (0) (0) (n.m.)
Minority interest 0% 1 0% 1 (0) (27%)
Net income (loss) (27%) (377) (27%) (491) (114) (30%)
GRUPO IUSACELL, S.A. DE C.V. AND SUBSIDIARIES
MILLIONS OF MEXICAN PESOS OF MARCH 31, 2006 PURCHASING POWER
(UNAUDITED FIGURES)
1Q05 1Q06 Change
Cash and cash
equivalents 3 0% 23 0% 19 n.m.
Customers 355 3% 385 4% 30 8%
Due from related parties 116 1% 44 0% (73) (62%)
Advanced payments and
other receivables 318 3% 245 2% (73) (23%)
Unamortized handset
subsidy 186 2% 441 4% 254 100%
Inventories 160 1% 67 1% (93) (58%)
Current assets 1,139 10% 1,204 11% 65 6%
Fixed assets 7,087 63% 6,089 58% (998) (14%)
Goodwill - Net 1,871 17% 1,871 18% (0) (0%)
Other assets 1,099 10% 1,418 13% 319 29%
-- 0%
Total assets 11,196 100% 10,582 100% (614) (5%)
Short-term debt 9,143 82% 8,636 82% (508) (6%)
Accrued interest 1,900 17% 2,603 25% 703 37%
Short-term liabilities
with financial cost 11,043 99% 11,239 106% 196 2%
Suppliers 309 3% 340 3% 31 10%
Related parties 250 2% 294 3% 45 18%
Unaccrued air time 150 1% 85 1% (65) (43%)
Accumulated expenses and
other payables 1,011 9% 938 9% (72) (7%)
Short-term liabilities
without financial cost 1,720 15% 1,659 16% (61) (4%)
SHORT-TERM LIABILITIES 12,763 114% 12,898 122% 135 1%
LONG-TERM LIABILITIES 26 0% -- 0% (26) (100%)
Advances from customers -- -- 268 3% 268 n.m.
STOCKHOLDERS' EQUITY (1,594) (14%) (2,585) (24%) (991) (62%)
LIABILITIES + EQUITY 11,196 100% 10,582 100% (614) (5%)
GRUPO IUSACELL CELULAR, S.A. DE C.V. AND SUBSIDIARIES
MILLIONS OF MEXICAN PESOS OF MARCH 31, 2006 PURCHASING POWER
(UNAUDITED FIGURES)
QUARTERLY INCOME STATEMENT 1Q05 1Q06 Change
Gross Revenues 107% 1,505 106% 1,989 484 32%
Commissions (7%) (105) (6%) (112) (7) (7%)
Net Revenues 100% 1,400 100% 1,877 476 34%
Cost of services 53% 747 45% 842 96 13%
Handset Subsidy 6% 79 17% 313 234 297%
Total Cost 59% 825 62% 1,155 330 40%
Gross Profit 41% 575 38% 722 147 26%
Operating Expenses 30% 415 23% 426 11 3%
Depreciation and
Amortization 26% 360 19% 359 (1) (0%)
Total Expenses 55% 775 42% 786 10 1%
Operating Loss (14%) (200) (3%) (64) 137 68%
Operating Profit before
Depreciation and
Amortization 11% 160 16% 295 136 85%
Loss from sale of fixed
assets and other expenses (2%) (34) 8% 156 189 562%
Comprehensive Financing Cost
Interest Expense - Net (8%) (114) (7%) (140) (26) (23%)
Exchange gain (loss) (1%) (10) (8%) (158) (148) (n.m.)
Gain from net monetary
position 3% 36 2% 38 2 6%
(6%) (88) (14%) (260) (172) (197%)
Loss befores taxes (23%) (321) (9%) (168) 153 48%
Tax Provisions (1%) (14) 0% 0 14 101%
Equity in income (loss) of
subsidiaries 0% -- 0% -- -- 0%
Minority interest 0% 1 0% 1 (0) (27%)
Net income (loss) (24%) (334) (9%) (167) 167 50%
GRUPO IUSACELL CELULAR, S.A. DE C.V. AND SUBSIDIARIES
MILLIONS OF MEXICAN PESOS OF MARCH 31, 2006 PURCHASING POWER
(UNAUDITED FIGURES)
1Q05 1Q06 Change
Cash and cash
equivalents 2 0% 2 0% 0 13%
Customers 356 4% 386 4% 30 8%
Due from related parties 297 3% 546 6% 249 84%
Advanced payments and
other receivables 254 3% 195 2% (59) (23%)
Unamortized handset
subsidy 186 2% 441 5% 254 100%
Inventories 160 2% 67 1% (93) (58%)
Current assets 1,255 13% 1,636 17% 381 30%
Fixed assets 6,500 66% 5,480 57% (1,020) (16%)
Goodwill - Net 1,680 17% 1,680 18% (0) (0%)
Other assets 455 5% 787 8% 332 73%
Total assets 9,890 100% 9,583 100% (308) (3%)
Short-term debt 4,797 48% 4,530 47% (266) (6%)
Accrued interest 431 4% 629 7% 197 46%
Short-term liabilities
with financial cost 5,228 53% 5,159 54% (69) (1%)
Suppliers 281 3% 274 3% (7) (3%)
Related parties 251 3% 542 6% 291 116%
Unaccrued air time 150 2% 85 1% (65) (43%)
Accumulated expenses and
other payables 807 8% 575 6% (232) (29%)
Short-term liabilities
without financial cost 1,489 15% 1,476 15% (13) (1%)
SHORT-TERM LIABILITIES 6,717 68% 6,635 69% (81) (1%)
LONG-TERM LIABILITIES 0 0% -- 0% (0) (100%)
Advances from customers -- -- 268 3% 268 100%
STOCKHOLDERS' EQUITY 3,173 32% 2,679 28% (494) (16%)
LIABILITIES + EQUITY 9,890 100% 9,583 100% (308) (3%)
