A grueling eighteen months after talks began, Grupo Minero Mexico (GMM) has closed the restructuring of nearly US$900 million in debt, including roughly US$450 million of paper backed by mining exports. "The banks, bondholders, and the company came slowly together...we were able to cut through the posturing and arrive at a tolerable situation," said Michael Brown, senior associate at Bingham McCutchen, which represented the export note holders. About two-thirds of the total debt was folded into a bullet maturing in 2007, the rest was rescheduled into a 2007 with amortizations starting March 2004.

The structured export notes (SENs) included about US$200 million of MBIA-wrapped 2004s, US$75 million of 2007s, and US$180 million of 2011s. All the debt was restructured on a pari passu basis, a source said. Sidley Austin Brown & Wood advised the company, while Mayer, Brown, Rowe & Maw was counsel for the bank creditors, which was led by Bank of America and included private and government institutions from the U.S., Europe and Mexico, according to sources. FTI Consulting acted as financial advisor on the structured side, while PricewaterhouseCoopers was the counterpart for GMM.

The mining company first stumbled when it violated a covenant in the structured paper, which moved investors to act. The event also triggered automatic ratings downgrades. SEN holders extended a waiver for trapping export collections, but that expired in March 2002. "They were choked off from any kind of financing," said a source familiar with the company. Liquidity was fast evaporating and to add insult to injury, some mines were hit by worker strikes. "At one point, the situation looked very bleak for the company," the source added.

Depressed copper prices largely brought on the grim situation, while the purchase of debt-saddled Asarco compounded the parent company's financial funk. The recent restructuring for GMM went hand-in-hand with a US$550 million workout for Asarco, a source said.

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