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Borrower profile: Maxcom starts new phase of growth

Mexican fixed-line operator Maxcom almost defaulted on its debt a few years ago. But in December the company successfully returned to the international capital markets, proving that the appetite for Latin American high-yield credits is as strong as ever. Chloe Hayward speaks to CFO José-Antonio Solbes about the company’s turnaround.

Maxcom factbox

CEO: René Sagastuy (March 2003)
CFO: José-Antonio Solbes (Oct 2003)
COO: Ricardo Arevalo Ruiz (May 2003)
Revenues (third quarter of 2006): Ps$458.2 million ($41.5 million)
Bond deal: $200 million unsecured bond
Lead manager: Morgan Stanley
Credit ratings: B/B3
Acquired Grupo Telereunion in July 2006

“Maxcom is emerging from its volatile past,” says Manuel Guerena, credit analyst at Standard and Poor’s. Nobody can accuse Guerena of hype – the Mexican fixed-line operator has endured some torrid times but now it seems the company is back on track. It was on the verge of a default in 2001. The recovery began with a backs-against-the-wall restructuring in April 2002. Last December, however, the firm returned successfully to the international capital markets with a $200 million, 10-year non-call five bond, which Morgan Stanley sole lead managed. The US bank has gained a reputation for executing difficult transactions and is, arguably, the go-to underwriter for Latin American high-yield credits. The funds from the bond issue will be used for capital expenditure and debt refinancing, and raising them marks a new phase in ensuring Maxcom’s financial stability. Although the company is a small player in the Mexican market, it maintains a strong customer base and can now claim to be one of the fastest-growing companies in Mexico.

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