NII Holdings Inc.
), which provides wireless services in several Latin American
countries under the Nextel brand, is currently exploring several
options to restructure its financial obligations.
On Aug 15, 2014, the company missed $118.8 million in coupon
payment on its $800 million of 10% senior notes due Aug 2016.
Nevertheless, the company has been granted a 30-day grace window to
make the interest payment or face potential non-repayment
Yesterday, NII Holdings agreed to sell its full equity interest
in the company's Nextel Chile unit to Fucata SA. In 2013, Nextel
Chile contributed approximately 1.5% of the total revenue of the
At present, NII Holdings is negotiating with creditors regarding
debt restructuring which include a possible debt swap or exchanging
bonds for equity. At the end of the second quarter of 2014, the
company had around $5.8 billion of outstanding debt.
NII Holdingsis facing severe competitive threat from America
Movil S.A.B. (
) and Telefonica S.A. (
). These companies are aggressively deploying 4G wireless
technologies in major Latin American markets, offering faster
download speeds for smartphones.
Moreover, the company is facing serious problems with its
roaming services after Sprint Corp. (
), from which it licenses the Nextel brand for Latin America,
closed its iDEN network in Mexico in Jun 2014.
In Mar 2014, NII Holdingshired investment bank UBS AG as an
advisory body to explore several strategic options for its future
course of business. The strategies include forming a partnership
with other wireless operators, disinvestment of some parts of its
existing business or a merger or complete sell out of the company
to any prospective buyer.
Together with its second-quarter 2014 earnings release,
management announced that NII Holdings will probably file for
Chapter 11 bankruptcy protection after it failed to fulfill its
Meanwhile, on Aug 14, 2014, a leading credit rating agency,
Moody's Investor Services had downgraded NII Holdings corporate
family rating to Caa2, reflecting the company's weak operating
performance and the high likelihood of a bankruptcy filing due to
NII Holdings' inability to solve its liquidity problems. The
outlook also remains negative for further downgrades. NII Holdings
currently carries a Zacks Rank #4 (Sell).
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