CTI Holdings SA: First APE to be endorsed by an Argentine Court

CTI Holdings S.A. (?CTI?) became the first of the ?big? Argentine companies to obtain court approval of an out-of-court reorganization proceeding, under the form of an ?Acuerdo Preventivo Extrajudicial? or ?APE? entered into by CTI pursuant to the Argentine Bankruptcy Law No. 24,522 as amended. CTI is currently controlled by Mexican telecommunications company America Móvil S.A. de C.V.

CTI filed its APE on August 29, 2003 with the initial consent of creditors representing 69.51% of the company?s global indebtedness. As of September 24, 2003, the majority of consenting creditors increased to 92.91%, as various creditors presented their consents after the APE was filed with the court.

On December 19, 2003, judge Angel O. Sala in charge of the National Commercial Court No. 14, located in the City of Buenos Aires, Argentina, endorsed the CTI APE. After the judicial endorsement, the APE became effective against all unsecured creditors, including those that did not consent to it. The APE order was appealed by an alleged creditor of a subsidiary of CTI, although such appeal did not suspend the effects of the APE.

Pursuant to CTI?s APE, unsecured creditors were paid U.S.$0.141 in cash per U.S.$1.00 of debt, resulting in a haircut of 86% of CTI?s total indebtedness of US$ 310,942,205.12, including US$ 262,848,000 11½ Senior Deferred Coupon Notes Due 2008. Hugo Maciel, head litigating partner of Hope Duggan & Silva, indicated that ?CTI´s APE constitutes a successful application of the novel prepackaged reorganization mechanism that was written into Argentine legislation as recently as May, 2002?.

Ricardo W. Beller, partner of Marval, O?Farrell & Mairal, commented: ?CTI was able to obtain court approval in a record time of less than four months mainly thanks to the simplicity of the transaction, which consisted in a single bullet payment of cash, the support of all the significant creditors and the efficiency of the court and counsel of various parties involved in the matter.?

CTI Holdings S.A. was advised in Argentina by Hope, Duggan & Silva, through a team led by partners Juan Duggan and Hugo Maciel, and associates Gotardo Pedemonte and Axel Mayo, and in New York it was advised by Curtis, Mallet-Prevost, Colt & Mosle LLP, through a team led by partner Lawrence Goodman and associates Guillermo Ulke, Steven Reisman and Ana I. Gallo.

América Móvil was advised by its General Counsel Alejandro Cantú Jiménez, by Marval, O?Farrell & Mairal in Argentina through a team led by partners Alberto Rivera, Martín Campbell and Ricardo W. Beller, and associates Hernán Slemenson (of Marval?s New York Office) Mariano Gramajo and Facundo Recondo, and in New York by Cleary, Gottlieb, Steen & Hamilton through a team led by partners Nicolas Grabar and Francisco Cestero and associates Chantal Kordula and David Bardeen.