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NII Prepares For Likely Chapter 11 Filing

NEW YORK (The Deal) -- NII Holdings (NIHD), which provides wireless services in Latin America under the Nextel brand, warned late Monday that it's likely to file for Chapter 11 protection in the "very near future."

Indeed, Friday will be a red-letter date for the Reston, Va.-based company struggling with declining revenues, operational problems and high debt, as it will be packed with events that could push NII closer to the courthouse.

The company owes roughly $118.75 million in interest payments due on Friday on its 7.875% notes, 11.375% notes and 10% notes.

Additionally, the company's forbearance agreement with certain holders of senior notes issued by subsidiaries NII Capital Corp. and NII International Telecom SCA, including hedge fund Aurelius Capital Management LP, expires the same day.

NII International Telecom SCA, the company's international subsidiary, has $700 million in 7.875% senior unsecured notes due Aug. 15, 2019 (announced May 16, 2013), and $900 million in 11.375% senior unsecured notes due Aug. 15, 2019 (announced Feb. 11, 2013).

NII Capital Corp., the company's domestic subsidiary, has $1.45 billion in 7.625% senior unsecured notes due April 1, 2021 (announced March 24, 2011); $500 million in 8.875% senior unsecured notes due Dec. 15, 2019 (announced April 5, 2010); and $800 million in 10% senior unsecured notes due Aug. 15, 2016.

NII is also facing a Friday deadline to certify to its Brazilian bank lenders that it is compliant with its debt covenants. The company has breached the net debt covenant under loans with the banks, which total $443.1 million, as of June 30, and has not yet received a waiver for the violation.

"We also continue to work with our advisers to identify and evaluate potential strategic transactions and have engaged in a series of productive discussions with holders of various series of our senior notes regarding a potential consensual restructuring of our balance sheet," NII's CFO Juan Figuereo said in a statement Monday.

NII has been working with UBS Investment Bank to explore M&A and divestiture opportunities, and Rothschild to evaluate debt refinancing or restructuring options, since March.

The company said in a regulatory filing Monday that it is talking to noteholders about restructuring options, including a debt-for-equity swap that would exchange all or some of its $4.4 billion in senior notes for equity.

The filing said equity holders will probably lose all, or substantially all, of their investment in the restructuring.

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