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 business.
Under terms of the agreement, 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 competition a 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 family," 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 conditions.
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 30 days.
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.