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 August 13, 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)
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: August 13, 2004 By /s/ Mayela Rincon de Velasco
Durango, Mexico --------------------------------
Name: Mayela Rincon de Velasco
Title: Chief Financial Officer
CORPORACION DURANGO REACHES AGREEMENT WITH CREDITORS
ON TERMS OF PROPOSED FINANCIAL RESTRUCTURING
Plan Support Agreement entered into with Creditors
holding unsecured debt in excess of amount
required to implement the plan
Durango, Dgo., Mexico, August 13, 2004 - Corporacion Durango, S.A. de
C.V. (BMV : CODUSA) (the "Company" or "Corporacion Durango "), today
announced that it had reached an agreement in principle under which
substantially all of its unsecured bank lenders and members of the
Ad Hoc Bondholders Committee have agreed to support the Company's
proposed financial restructuring plan. The proposed financial
restructuring, which is supported by creditors holding approximately
68% of the Company's unsecured debt, is subject to approval by the
First Federal District Court in Durango,Mexico presiding over the
Company's concurso mercantil proceeding (the "Mexican Court").
In a concurso mercantil proceeding, a debtor can confirm a financial
restructuring plan with the support of the holders of a majority of
its recognized debt and such plan, once confirmed,would be binding on
all of its creditors.
Although the Mexican Court has not yet approved the Company's concurso
mercantil application, the examiner appointed by the Federal Institute
of Specialists in Concurso Mercantil has determined the Company meets
the standards for such application and the Company anticipates that
such approval will be issued in the coming weeks.
The Company's secured creditors and the non-financial creditors of the
Company's operating subsidiaries, including their employees, vendors,
suppliers and customers, will not be affected by the proposed financial
restructuring.
Miguel Rincon, Chairman of Corporacion Durango, commented: "We are
pleased to be able to disclose at this time the terms of our proposed
financial restructuring plan. We believe that the terms of the
proposed financial restructuring plan are fair and equitable to all
of the creditors of Corporacion Durango as evidenced by the support
of a substantial majority of our creditors. We expect that the
proposed financial restructuring 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." Under the proposed financial restructuring,
the Company's unsecured creditors will receive new debt equal to 85%
of the outstanding principal amount of the Company's unsecured debt.
The Company's unsecured bank creditors would amend and restate their
existing loans as Series A Loans in an aggregate principal amount of
approximately $116.1 million.
The holders of the Company's other unsecured indebtedness, including
the Company's 12 5/8% Senior Notes due 2003, 13 1/8% Senior Notes due
2006,13 1/2% Senior Notes due 2008 and 13 3/4% Senior Notes due 2009,
would receive Series B Notes to be issued in an aggregate principal
amount of approximately $433.8 million in exchange for their debt.
In addition, all such creditors would receive an aggregate of 17% of
the Company's capital stock on a fully diluted basis.
The Series A Loans will bear interest at LIBOR plus 2.75% per annum,
payable quarterly, and will mature on December 31, 2012. Principal
under the Series A Loans will be amortized based on the following
schedule: 5.0% in 2005; 12.0% in 2006; 12.0% in 2007; 12.0% in 2008;
12.0% in 2009; 13.0% in 2010; 20.0% in 2011; and 14.0% in 2012.
The Series A Loans 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 7.50% per annum
until December 31, 2005, 8.50% per annum from January 1, 2006 through
December 31, 2006, and 9.50% per annum thereafter until maturity on
December 31, 2012. 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 A Loans and Series B Notes will be guaranteed by certain
of the Company's subsidiaries, and be secured ratably by the real
estate and other fixed assets of the Company and certain of the
Company's Mexican subsidiaries and the common shares of two of the
Company's subsidiaries.
A more detailed summary of the terms and conditions of the Company's
proposed financial restructuring is contained in the definitive term
sheet filed by the Company today with the Securities and Exchange
Commission on Form 6-K. The agreement with the Company's creditors
is subject to termination upon the occurrence of certain events.
The Company intends to communicate further information in the coming
weeks concerning the next steps in the concurso mercantil process.
Individuals with questions are invited to contact Emilio
J.Alvarez-Farre of White & Case LLP, counsel to the Company, at
(305) 995-5219, e-mail: ealvarez@whitecase.com
Corporacion Durango is the largest producer of containerboard in
Mexico through its Grupo Durango division, is the largest Mexican
producer of newsprint through its Pipsamex division, is the largest
manufacturer of corrugated containers in Mexico through its Empresas
Titan division, is a leading independent paper and packaging producer
in the U.S. through its McKinley Paper division, and is one of the
largest manufacturers in Mexico of uncoated free-sheet and multi-wall
sacks.
This press release is not an offer to sell or a solicitation of an
offer to buy any securities of the Company. The Series A Loans, the
Series B Notes and the shares of the Company's capital stock to be
issued upon the consummation of the proposed financial restructuring
have not been and will not be registered under the United States
Securities Act of 1933, as amended, and may not be offered or sold in
the United States absent registration or an applicable exemption from
the registration requirements thereunder.
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
subsidiaries to 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