Nextel’s international unit files for bankruptcy protection

A unit of Nextel Communications, Reston, VA, has filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy code.

NII Holdings (formerly named Nextel International Inc.), announced on May 24 that it would restructure its debt, reducing the amount it owes creditors from $2.7 billion to less than $500 million. In reaching an agreement with creditors, the company made a commitment to obtain $190 million in new capital, including $140 million from bondholders. Nextel Communications would provide the remaining $50 million in return for a cross-border, spectrum-sharing agreement.

Nextel Communications lost an estimated $2 billion that it invested in NII, including about $750 million in cash and stock poured into the company during 2001. At the end of last year, the parent company wrote off $1.7 billion of the amount it had spent on NII.

After the restructuring, creditors will own 55% of NII, with Nextel Communications’ stake reducing to 45%.

Motorola has agreed to defer principal payments on the secured vendor financing it provided for NII’s purchase of its equipment.

Unsecured creditors also are to receive equity in the reorganized company.