SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16
OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of Abril 30th, 2004
Durango Corporation
(f/k/a Grupo Industrial Durango, S.A. de C.V.)
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(Translation of registrant's name into English)
Torre Corporativa Durango, Potasio 150, Cuidad Industrial,
Durango, Durango, Mexico
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F. Form 20-F [x] Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934. Yes No [x]
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-_____________.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. CORPORACION DURANGO, S.A. DE C.V.
Date: April 30th, 2004 By /s/ Mayela Rincon de Velasco
Durango, Mexico --------------------------------
Name: Mayela Rincon de Velasco
Title: Chief Financial Officer
CORPORACION DURANGO ANNOUNCES TERMS OF PROPOSED
FINANCIAL RESTRUCTURING
Durango, Dgo., Mexico, April 30, 2004 - Corporacion Durango,
S.A. de C.V. (NYSE: CDG / BMV: CODUSA) (the "Company"), today
announced the principal terms of the agreement in principle
reached with its bank lenders and members of the Ad Hoc
Bondholders Committee regarding its proposed financial
restructuring. The proposed restructuring, which is
supported by creditors holding approximately 55% of the
Company's unsecured bank debt and guaranteed notes, is
subject to certain conditions, including the execution
and delivery of definitive documentation and the approval
of certain other creditors.
Miguel Rincon, Chairman of Corporacion Durango, commented:
"We are pleased to disclose at this time the principal terms
of our agreement in principle. As we stated earlier, this
consensual agreement with our creditors represents an
important milestone in our proposed financial restructuring.
We expect that the proposed recapitalization plan will result
in a more adequate and competitive capital structure for
Corporacion Durango and substantially enhance the financial
flexibility of the Company and its operating subsidiaries.
We wish to thank our creditors for their unwavering support
and look forward to a swift conclusion to this transaction."
Under the proposed restructuring, the Company's unsecured
creditors would exchange their existing financial debt for
one or more tranches of debt instruments the Series A Notes,
the Series B Notes, the Series C-A Notes, the Series C-B Notes
and the Series D Notes to be issued in an aggregate principal
amount of approximately $715 million. In addition,
participating creditors would receive an aggregate of 17% of
the Company's share equity, on a fully diluted basis. The
Company would also offer to acquire the Company's outstanding
guaranteed notes and unsecured guaranteed bank debt at purchase
prices of no more than $650 per $1,000 of principal amount.
The Company would make available $43.5 million to purchase
tendered debt.
The Series A Notes will bear interest at LIBOR plus 3% per
annum, payable quarterly, and will mature on December 31, 2010.
Principal under the Series A Notes will be amortized based on the
following schedule: 5.0% in 2005; 12.5% in 2006; 15.0% in 2007;
15.0% in 2008; 25.0% in 2009; and 27.5% in 2010. The Series A
Notes may be prepaid at the option of the Company at any time on
or after December 31, 2005, without premium or penalty.
The Series B Notes will bear interest at the rate of 7.75% per
annum until December 31, 2004, 8.75% per annum from
January 1, 2005 through December 31, 2005, and 9.75% per
annum thereafter until maturity on December 31, 2010.
Interest on the Series B Notes will be payable quarterly.
The Series B Notes will be callable at the option of the
Company on or after December 31, 2005, at a declining premium
of 4% of face value.
The Series C-A Notes and Series C-B Notes will not bear interest
unless certain events occur, in which case interest will accrue
at the rate of 8% per annum retroactively from the date of issue.
The Series C-A Notes and Series C-B Notes will mature on
December 31, 2012, and will be subject to redemption at the
option of the Company under certain circumstances at a discount
of up to 50% of face value.
The Series D Notes will bear interest at the rate of 10.5%
perannum. Interest on the Series D Notes will be compounded
annually and will be payable upon maturity on December 31,2013.
The Series A Notes and Series B Notes will be guaranteed by
certainof the Company's Mexican subsidiaries and be secured
ratablyby the fixed assets of the Company and such subsidiaries.
The Series C-A Notes and Series C-B Notes will be similarly
guaranteed (such guaranty to be subordinate to the guaranty of
the Series A Notes and Series B Notes), but will not be secured.
The Series D Notes will not be guaranteed or secured.
Holders of the Series A Notes and Series B Notes will receive a
restructuring fee, payable on the issue date, in partial
consideration for their agreement to forgive interest accrued
after August 15,2003 on their existing financial debt.
Holders of the Series C-A Notes and Series C-B Notes and Series
D Notes will not receive this restructuring fee.
The Series A Notes, Series B Notes, Series C-A Notes and Series
C-B Notes will be issued only to the holders of the Company's
outstanding guaranteed notes (the notes due 2006, 2008 and 2009)
and unsecured guaranteed bank debt. The Series D Notes will be
issued to holders of the Company's other financial indebtedness
not guaranteed by theCompany's operating subsidiaries.
The Company's non-financial creditors, including its vendors
and suppliers, will not be affectedby the proposed financial
restructuring.
A more detailed summary of the terms and conditions of the
Company's proposed financial restructuring is contained in the
definitive term sheet and plan support agreement filed by the
Company today with the Securities and Exchange Commission on
Form 6-K. Creditors of the Company holding approximately 55%
of the Company's guaranteed notes and unsecured guaranteed bank
debt have executed the plan support agreement.
The Company intends to communicate further information in the
coming weeksconcerning the next steps in the financial
restructuring process. Individuals with questions concerning
the financial restructuring process are invited to contact
Emilio J. Alvarez-Farre of White & Case LLP, counsel to the
Company, at (305) 995-5219.
Corporacion Durango is the largest producer of containerboard
in Mexico through its division Grupo Durango, is the largest
Mexican producer of newsprint through its division Pipsamex,
is the largest manufacturerof corrugated containers in Mexico
through its division Empresas Titan,and is a leading independent
paper and packaging producer in the U.S.through its division
McKinley Paper and is also one of the largest manufacturers in
Mexico of uncoated free-sheet and multi-wall sacks.
Special Note Regarding Forward-Looking Statements
This press release contains statements that are forward-looking
within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements are only predictions and are not
guarantees of future performance. Investors are cautioned that
any such forward-looking statements are and will be, as the case
may be, subject to many risks, uncertainties and factors relating
to the operations and business environments of Corporacion Durango
and its subsidiaries that may cause the actual results of the
companies to be materially different from any future results
expressed or implied in such forward-looking statements.
Factors that could cause actual results to differ materially from
these forward-looking statements include, but are not limited to,
the following: the ability of Corporacion Durango and its
subsidiariesto continue as going concerns; their ability to obtain
and maintain normal terms with vendors and service providers; their
ability to maintain contracts that are critical to their operations;
their ability to fund and execute their business plan; their ability
to attract, motivate and/or retain key executives and associates;
and their ability to attract and retain customers.
Additionally, other factors should be considered in connection with
any Forward Looking Statements, including other risks and uncertainties
set forth from time to time in Corporacion Durango's reports filed with
the United States Securities and Exchange Commission. Although
Corporacion Durango believes that the expectations and assumptions
reflected in the forward-looking statements are reasonable based on
information currently available to its management, Corporacion
Durango cannot guarantee future results or events.
Corporacion Durango expressly disclaims a duty to update any of the
forward-looking statement.
CONTACTS
Corporacion Durango, S.A. de C.V. White & Case LLP
Mayela R. Velasco Emilio J. Alvarez-Farre
+52 (618) 829 1008 (305) 995-5219
mrinconv@corpdgo.com.mx ealvarez@whitecase.com