Bell Atlantic, Grupo Iusa Announce Agreement To Revise Ownership
Structure of Grupo Iusacell
Agreement Positions Iusacell For Growth Opportunities Resulting from
Deregulation, Opening of New Markets
November 26, 1996
PHILADELPHIA and MEXICO CITY -- Bell Atlantic
Corporation (NYSE: BEL)
and Grupo Iusa announced today that they and the Peralta family have
signed an agreement in principle to change the ownership structure of
Grupo Iusacell S.A. de C.V. (NYSE: CEL, CEL.D), under which Bell
Atlantic will assume management control over the operations of the
Under terms of the agreement, HREF="http://www.ba.com/speeches/profiles/babbio.html">Lawrence T.
Babbio, Jr., vice chairman
of Bell Atlantic, will be appointed vice chairman of Grupo Iusacell,
replacing Carlos Peralta, who will remain on the Board of Directors.
Bell Atlantic will transfer certain Series B and Series D shares in
the company for a controlling interest in the Peralta group's Series A
shares, at a premium of US $50 million, and take a majority of the
Board seats. The transfer will not affect the aggregate share
ownership of the company, which would remain at approximately 48
percent for the Peralta group and 42 percent for Bell Atlantic.
Under the terms of the agreement, Bell Atlantic will lend Grupo
Iusacell US $150 million in subordinated debentures convertible into
Series A shares at $7 per ADS. Bell Atlantic and the Peralta group
will also convert certain outstanding debt and provide interim funding
convertible into additional Grupo Iusacell shares. The parties have
agreed to an arrangement which will permit the Peralta group to sell
one third of its interest in Grupo Iusacell to Bell Atlantic at the
end of each of the next three years, at prices of $8.50, $9.60 and
$10.70 per ADS, respectively.
"Our Grupo Iusa manufacturing portfolio is expanding rapidly and
demanding significantly more time and effort, in view of the
tremendous increase in exports," said Peralta. "With
reality in Mexican telecommunications, we think now is the right time
for our partner, Bell Atlantic, to take the lead at Grupo Iusacell."
"We appreciate this expression of confidence by the Peralta
said Babbio. "We believe the Mexican telecommunications market
presents tremendous opportunities, and this agreement demonstrates our
continuing commitment to Mexico."
The agreement will better position Iusacell, the leading independent
wireless telecommunications company in Mexico, for growth
opportunities in Mexican domestic telecommunications, including
cellular, fixed wireless and long distance services, resulting from
deregulation, the opening of new markets, and improving economic
The agreement will also permit Iusacell to more fully benefit from
synergies inherent in Bell Atlantic's worldwide telecommunications
business, and more closely align its business strategies with Bell
Atlantic's partnership position in a U.S. national wireless alliance
covering 170 million people.
The transaction is subject to the execution of a definitive agreement,
and approvals of the Board of Directors of Bell Atlantic and the
shareholders of Grupo Iusacell. The approvals of the Secretary of
Communications and Transportation, the Foreign Investment Commission
and certain other agencies of the Mexican Government are also
required. The parties intend to close the transaction within the next
Iusacell is the non-wireline cellular carrier serving four of Mexico's
nine regions in the central portion of the country, including Mexico
City, covering 62 million people, 70 percent of the country's total
population. In addition to its cellular operations, Iusacell provides
data and satellite network services, long distance and nationwide
paging services. The company also operates a highly successful trial
of fixed radiotelephony services.
Grupo Iusa, founded in 1939, is one of the largest industrial groups
in Mexico, with interests in construction, automotive equipment and
financial services. It is wholly owned by the Peralta family.
Bell Atlantic Corporation is at the
forefront of the new
communications, entertainment and information industry. In the
mid-Atlantic region, the company is the premier provider of local
telecommunications and advanced services. Globally, it is one of the
largest investors in the high-growth wireless communication
marketplace. Bell Atlantic also owns a substantial interest in
Telecom Corporation of New Zealand and is actively developing
high-growth national and international business opportunities in all
phases of the industry.