Debt Restructure

On October 11, 2013, Maxcom exchanged its “Senior Notes” with maturity in 2014, face value of US$200 million and annual interest rate of 11% (coupon rate), for a new issue of senior notes “Step-Up Senior Notes 2020”, which have the following features:

• Amount Issued: US$180.35 million
• Step-up interest rate:
  • October 11, 2013 until June 14, 2016.....6%
  • June 15, 2016 until June 14, 2018............7%
  • June 15, 2018 until June 15, 2020............8%
• Semiannual interest payment (December 15th and June 15th)

As a result of the agreement with bondholders, Management accepted to conduct a bond repurchase, as well as to grant capitalization rights to bondholders, for up to 15% of the debt position they held. As a consequence of these commitments, US$4.67 million of the outstanding debt was further reduced. As of December 31, 2013, the outstanding balance of Step-Up Senior Notes 2020 amounted to US$175.67 million.

Throughout 2015 and the first quarter of 2016 Maxcom purchased and cancelled a total principal amount of US$39.7 million of Step-Up Senior Notes 2020, using cash for US$27.2 million, which represents an income from debt reduction of US$12.5 million.

As a result of this actions, the outstanding Step-Up Senior Notes 2020 amounted to US$136.0 million as of march 31, 2016,

Under a strict framework of risk management, Maxcom decided to partially hedge the semiannual coupon payments of its Senior Notes with a cross-currency swap, thus minimizing the exchange and interest rate risks.

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