Newsroom: Article

Omni News May 2007 - Altos Hornos de México

Mexican steelmaker Altos Hornos de México (AHMSA) reported net earnings of $44m for the first quarter of 2007, an increase of 115% compared to the first quarter of 2006. Revenue for the quarter increased 20% year-on-year, the company announced in its quarterly financial report. The results came in spite of an average steel price of 100 pesos per tonne below the Q1 2006 price level, company president Alonso Ancira said in the statement. He furthermore reported that market conditions were good, predicting a stable period ahead, allowing AHMSA to maintain good levels of profitability.

At the same time, AHMSA announced that negotiations with its key creditors regarding a debt restructuring have been suspended.

In May of 2006, the broad terms of a possible new creditors’ agreement were announced, offering the debt holders cash, new debt with maturities up to 12 years and equity (with additional clauses related to future steel prices and company performance). AHMSA indicated that the key creditors – including Ashmore Investment Management Ltd and Shaw & Co – were requesting terms for the restructuring too far beyond these May 2006 terms.

The market has responded quite well to this combination of news. The AHMSA bonds went up slightly to approximately 77%. The explanation of this market reaction is related to the implied confirmation by AHMSA of the May 2006 terms as a minimum package. This has effectively put a floor below the current price levels. The real question for the short term therefore remains whether a creditors’ agreement can be reached at the May 2006 terms.

Holders of AHMSA debt are invited to contact us.

For brokerage requests or more information on specific debts, debt conversions and restructurings, please contact:

Omni Bridgeway Emerging Markets BV
Tobias Asserlaan 5, 2517 KC
The Hague, The Netherlands
Tel: (+31) 70 3384343, Fax: (+31) 70 3523469
Raymond van Hulst on vanhulst@omnibridgeway.com
Heleen Rijkens on rijkens@omnibridgeway.com

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