MEXICO CITY, June 16 /PRNewswire-FirstCall/ -- Grupo Radio Centro, S.A. de C.V. (BMV: RCENTRO-A,) ("Grupo Radio Centro" or the "Company"), Mexico's leading radio broadcasting company, announced today that a Mexican court has set aside and refused to enforce in Mexico the arbitration award issued against Grupo Radio Centro in a proceeding brought before the International Chamber of Commerce (the "ICC") by Infored, S.A. de C.V. ("Infored") and Mr. Jose Gutierrez Vivo in 2002. In March 2004, the ICC arbitration panel rescinded the contract between the parties and awarded Infored and Mr. Gutierrez Vivo collectively U.S.$21.1 million in damages. Today's ruling by the Mexican court is not subject to further judicial review in Mexico.
The Company had recorded a provision for the contingent liability related to the arbitration award, which amounted to Ps. 253.6 million as of March 31, 2006. This provision will be reversed and recorded as an extraordinary income item in June 2006.
The Company plans to initiate proceedings in the Mexican courts to recover up to U.S.$15 million in amounts that it had prepaid for future services to be provided by Infored and Gutierrez Vivo under the contract between the parties. In addition, the Company plans to continue the two legal proceedings against Mr. Gutierrez Vivo and Ms. Maria Ivonne Gutierrez Vivo that had been suspended pending a final determination on the arbitration award. The Company and a subsidiary, along with four minority shareholders, brought the suits to seek rescission of a stock purchase agreement relating to two radio stations. The stock purchase agreement had been entered into in connection with the contract that was the subject of the arbitration proceeding.
Company Description:
Grupo Radio Centro owns and/or operates 14 radio stations. Of these 14 radio stations, Grupo Radio Centro operates 11 in Mexico City. The Company's principal activities are the production and broadcasting of musical and entertainment programs, talk shows, news and special events programs. Revenue is primarily derived from the sale of commercial airtime. The Company also operates a radio network, Organizacion Impulsora de Radio, which acts as the national sales representative for, and provides programming to, Grupo Radio Centro-affiliated radio stations.
Note on Forward-Looking Statements: This release may contain projections or other forward-looking statements related to Grupo Radio Centro that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future results or events. Readers are referred to the documents filed by Grupo Radio Centro with the United States Securities and Exchange Commission, specifically the most recent filing on Form 20-F, which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements are based on information available to Grupo Radio Centro on the date hereof, and Grupo Radio Centro assumes no obligation to update such statements.
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