MEXICO CITY —
Fulvio Del Valle, President and Director General of Grupo Iusacell, stated that "The additional investment by our principal shareholders will provide Iusacell with the immediate means to strengthen two key areas for revenue growth in 1999 -- long distance and digital wireless. Future network investments will need to be reconsidered in the event the Mexican Congress implements the Hacienda's proposed 15% excise tax on telecommunication services."
The shareholder equity infusions will be effected in two tranches, one in December 1998 and another in the first quarter of 1999, and will be implemented by drawdowns from Bell Atlantic under the existing US $150 million subordinated convertible debenture facility. Upon each drawdown, debentures issued to Bell Atlantic will be converted into Grupo Iusacell Series A Shares at the US $0.70 per share conversion price established in the facility in November 1996; a total of approximately 86 million Series A Shares will be issued. In accordance with its August 1998 agreement with Bell Atlantic, the Peralta Group will be obligated to purchase half of these Series A Shares from Bell Atlantic at the US $0.70 per share price.
As with the third quarter 1998 US $71.5 million drawdown under this facility, Grupo Iusacell will extend the economic benefit of the terms of the convertible debenture to the public shareholders by means of an approximate US $7.2 million rights offer of shares in its previously announced new holding company at the same US $0.70 per share conversion price. The total amount of the rights offer by the new holding company will now be approximately US $15.7 million and, market conditions permitting, will be effected simultaneously with the previously announced exchange offer.
Howard F. Zuckerman, Grupo Iusacell Executive Vice President and CFO, added, "With these drawdowns and those taken in the third quarter, for a total of approximately US $132 million, Iusacell is strengthening its balance sheet and is taking the required steps to support current growth."
The exchange offer and rights offer will be subject to the receipt of necessary United States and Mexican government approvals, certain shareholder and third party consents and approvals, and market conditions. The consummation of the rights offer will also be subject to successful completion of the exchange offer.
*****************Grupo Iusacell is a leading independent telecommunications company in Mexico. It is the wireless cellular service provider in four of Mexico's nine regions in the central portion of Mexico (including Mexico City) covering a total of 67 million POPs, representing 69% of the country's total population. The auctions won for wireless services in regions 1 and 4 in northern Mexico will allow the Company to cover an additional 11 million POPs, or 11% of Mexico's total population. Since February 1997, the Company has been under the management and operating control of Bell Atlantic Corporation which owns, through subsidiaries, 47% of the Company's capital stock.
Note: This press release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Discussion of factors that may affect future results is contained in our filings with the Securities and Exchange Commission.