NEW YORK -- Verizon Communications (NYSE:VZ) today announced that it has transferred 5.5 million shares in CTI Holdings S.A. (CTI), a wireless communications company in Argentina, to a newly created trust for CTI employees.
The formation of the CTI Trust, which will distribute the shares to a program to be developed by CTI to give employees an equity-based stake in the company, decreases Verizon's ownership stake from 65 percent to 48 percent, further reducing Verizon's financial exposure to the Argentine economy.
CTI has been under significant financial pressure as the value of the peso has continued to drop and Argentina's economy has deteriorated. The company recently retained a U.S.-based financial adviser to assist in restructuring its approximately $1 billion of U.S. denominated debt, about 90 percent of which is non-recourse to Verizon. CTI recently announced its decision to suspend principal and interest payments on its debt.
Fares Salloum, president of Verizon International - The Americas, said, "Our actions will help Verizon minimize future risks associated with this investment. At the same time, we are providing CTI's employees with the potential of an additional financial incentive to strengthen CTI during a critical period for the economy in Argentina."
As a result of these actions, CTI will no longer be consolidated into Verizon's financial statements.
In addition, Verizon said it is reducing its representation on the CTI Board of Directors from a maximum of five directors on the nine-member body to a maximum of four.
In a related move, Carlos Espinal, CTI president and CEO, announced that he is resigning his position at CTI, effective March 31, and will assume a new position as Verizon's senior group vice president, International - Americas. In addition to his new duties, Espinal will remain a director on the CTI Board, will assist in the transition to new leadership and will oversee the CTI investment on behalf of Verizon.
Fernando del Rio, CTI's director of customer service, has been named interim CEO, effective March 31, until the CTI Board of Directors appoints a permanent replacement.
U.S. Trust has been appointed the initial trustee of the employee trust.
Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States, with 132.1 million access line equivalents and 29.4 million wireless customers. Verizon is also the largest directory publisher in the world. A Fortune 10 company with more than $67 billion in annual revenues and approximately 247,000 employees, Verizon's global presence extends to more than 40 countries in the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com.
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