NII Holdings Inc. struck a deal to sell its 70% stake in Nextel Brazil to América Móvil SAB de CV via the sale of one of the company's Luxembourg-based subsidiaries.
The sale represents the disposition of NII Holdings' sole remaining operating asset, the company said March 18. In connection with the transaction, AI Brazil Holdings BV has agreed to sell its 30% interest in Nextel Brazil so that América Móvil can be the only owner of Nextel Brazil.
Under the agreement, which has been unanimously approved by NII's board, América Móvil will buy all the equity interests in Nextel Brazil for $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% 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 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% convertible senior notes due 2023.
NII's preliminarily estimated that the amounts that will initially be available for distribution to NII stockholders relating to the transaction are $1 to $1.50 per share.
In connection with the transaction, NII and AI Brazil have agreed that if the transaction to sell Nextel Brazil is consummated, AI Brazil will be entitled to the first $10 million and 6% 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.
NII was advised by Jones Day. Rothschild & Co. and Greenhill & Co. acted as NII's financial advisers.