NII Holdings Plummets 59% On Possible Bankruptcy Filing; Q2 Loss Widens
(dpa-AFX International Compact Via Acquire Media NewsEdge) RESTON (dpa-AFX) - Shares of NII Holdings, Inc. (NIHD) plummeted nearly 59 percent in extended trading on Monday after the wireless communication provider said it is likely to file for bankruptcy due to its continued poor financial performance and its inability to satisfy certain financial covenants under its existing debt obligations.
The company noted it is likely to file a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in order to implement a restructuring of its obligations on a stand-alone basis or in conjunction with one or more potential strategic transactions.
"Despite the actions we've taken to improve our operational performance, we have fallen short in our efforts, leaving the Company with a liquidity position that is not sufficient to support the business," CEO Steve Shindler said in a statement.
The company has put plans in place to stabilize revenues and improve profitability, with more aggressive actions to reduce costs and balance investments in growth against the increasing pressure on liquidity.
However, these ongoing initiatives will not be sufficient to allow it to continue to operate unless it is able to restructure debt obligations due to the current liquidity position and the cash demands on business.
Meanwhile, the company continues to work with advisors to identify and evaluate potential strategic transactions and have engaged in a series of productive discussions with holders of various series of its senior notes regarding a potential consensual restructuring of balance sheet.
Reston, Virginia-based NII reported a net loss of $623.3 million or $3.62 per share for the second quarter, sharply wider than $396.4 million or $2.30 per share in the prior-year quarter.
Net loss from continuing operations for the quarter sharply widened to $629.3 million or $3.65 per share from $384.9 million or $2.23 per share in the year-ago quarter.
On average, seven analysts polled by Thomson Reuters expected the company to report a loss of $2.30 per share for the quarter. Analysts' estimates typically exclude special items.
Operating revenues for the quarter decreased 23 percent to $968.8 million from $1.26 billion in the same quarter last year, but topped five Wall Street analysts' consensus estimate of $948.10 million.
Nextel Brazil operating revenues declined to $479.4 million from $578.6 million, Nextel Mexico operating revenues decreased to $366.8 million from $502.7 million and Nextel Argentina operating revenues dropped to $108.1 million from $164.0 million in the year-ago quarter.
NII Holdings reported a net loss of 77,000 subscribers for the quarter, bringing its quarter-end subscriber base to 9.36 million, down 6 percent from last year. Consolidated average monthly service revenue per subscriber (ARPU) was $28, down from $36 a year ago.
Consolidated average monthly churn was 3.39 percent, compared to 2.67 percent in the year-ago quarter. Consolidated cost per gross add (CPGA) was $296, up $20 from last year.
"Our subscriber base in Brazil continued to grow during the second quarter overcoming a market slowdown during the World Cup and higher iDEN churn. While our subscriber losses in Mexico were lower than last quarter, we are still short of where we need to be in that market," Shindler added.
Looking ahead, the company said it will continue to take actions to improve results in Mexico including the optimization of distribution channels and the staging of 3G services to more effectively attract new customers.
NIHD closed Monday's regular trading session at $0.66, down $0.01 or 1.49% on a volume of 4.60 million shares. The stock plummeted a further $0.39 or 58.78% in after-hours trading.
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