NII Holdings to Sell Nextel Brazil to América Móvil
Monday, March 18, 2019 | Comments

NII Holdings agreed to sell its 70 percent interest in its operations in Brazil, Nextel Brazil, to América Móvil through the sale of one of NII's Luxembourg-based subsidiaries. The sale represents the disposition of NII's sole remaining operating asset. Additionally, AI Brazil Holdings agreed to sell its 30 percent interest in Nextel Brazil so that América Móvil will be the sole owner of Nextel Brazil following the transaction.

Under the terms of the purchase agreement, which has been unanimously approved by NII's board of directors, América Móvil will acquire all of the equity interests in Nextel Brazil for an aggregate purchase price of $905 million less net debt and subject to certain adjustments at closing, including reimbursement for capital expenditures and working capital investments from March 1 to closing.

NII will receive 70 percent of the final net proceeds after deducting a $2 million preferred share return due to AI Brazil. América Móvil will place $30 million of NII's portion of the net proceeds into an 18-month escrow account to secure NII's indemnification obligations under the purchase agreement.

"The announcement of this transaction marks the culmination of an extensive multiyear process to pursue a strategic path for Nextel Brazil and provides our best opportunity to monetize our remaining operating assets in light of the competitive landscape in Brazil and long-term need to raise significant capital to fund business operations, debt service and capital expenditures necessary to remain competitive in the future," said Dan Freiman, NII's chief financial officer (CFO). "Management and our board of directors believe the transaction is in the best interest of NII's stockholders."

The purchase agreement includes certain termination rights for each party and provides that, in specified circumstances, NII may be required to pay a termination fee of $25 million to América Móvil.

The closing of the transaction is subject to the satisfaction of customary conditions, including approval of the stockholders of NII; receipt of required regulatory and antitrust approvals; and either an amendment eliminating the obligations contemplated under, or an escrow agreement providing for a deposit in accordance with, the indenture to NII's $115 million principal amount of 4.25 percent convertible senior notes due 2023.

NII's board of directors has also approved and will submit to stockholders for approval a plan to dissolve and wind up NII after the closing of the transaction. NII's preliminary estimate of the amounts that will initially be available for distribution to NII stockholders relating to the transaction with América Móvil as part of NII's dissolution and windup process is $1 to $1.50 per share, depending on a number of variables, including the foreign currency exchange rate in effect at the closing of the transaction with América Móvil.

In connection with the transaction, NII and AI Brazil agreed that if the transaction to sell Nextel Brazil is consummated, AI Brazil will be entitled to the first $10 million and 6 percent of additional amounts recovered from the Nextel Mexico escrow, as a resolution to an outstanding disagreement regarding the characterization of any contributions to Nextel Brazil from future proceeds released from the Nextel Mexico escrow account.

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