Nextel Unit Files for Bankruptcy, Arranges Debt Restructuring - TheStreet

NII Holdings, a wholly owned international wireless communications subsidiary of

Nextel Communications

(NXTL)

, said on Friday that it filed for Chapter 11 bankruptcy protection and it has reached an agreement with its creditors to reduce its debt.

In a press release, NII said the debt restructuring will reduce its total indebtedness by about 80%, from its current level of $2.7 billion to less than $500 million. The agreement involves securing $190 million in new capital, $140 million of which will be from an offering of new senior secured notes and warrants to bondholders. Nextel has agreed to provide the additional $50 million in return for a cross border spectrum sharing arrangement.

The company also filed for Chapter 11, but NII said none of its foreign subsidiaries have filed for bankruptcy and they will continue operating in the ordinary course of business.

In a separate press release, Nextel said it is "pleased that NII Holdings has reached a positive agreement in principle with its key stakeholders. This agreement will allow high value wireless customers to continue to enjoy the Nextel value proposition in key Latin American markets and allow NII Holdings to grow beyond today's market challenges as a stand alone company."

Shares of Nextel closed Friday at $5.21.