RESTON, Va., Jan. 12, 2021 /PRNewswire/ -- On January 12, 2021, NII Holdings, Inc. ("NII") announced that it has reached agreement with AT&T Mobility Holdings B.V., New Cingular Wireless Services, Inc., AT&T Holdings Mexico, S. de R.L. de C.V., and AT&T Comunicaciones Digitales, S. de R.L. de C.V. (collectively, "AT&T") related to the amount of security needed to secure AT&T's contingent contractual claims in NII's dissolution proceedings (the "Settlement").
As previously disclosed, on October 8, 2020, NII filed a Verified Petition for Dissolution (the "Petition") in the Court of Chancery of the State of Delaware (the "Delaware Court"). The Petition was filed pursuant to the dissolution and claims process outlined in Section 280 of the General Corporation Law of the State of Delaware. A copy of the Petition, without its attached exhibits, is available on NII's website at www.nii.com. At the time of the filing of the Petition, AT&T had rejected NII's offer of security.
Also, on October 14, 2020, the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") issued a decision (the "Decision") that granted NII's motion for summary judgment related to an ongoing dispute between NII and AT&T. The dispute related to the timing of release requirements for funds deposited in escrow (the "Mexico Escrow") to satisfy potential indemnification claims to AT&T after NII, together with its wholly owned subsidiary NIU Holdings LLC ("NIU"), completed the sale of its operations in Mexico to AT&T. On March 25, 2019, NIU filed a claim in the Bankruptcy Court to recoup $68.3 million (subsequently revised to $65.8 million) from the Mexico Escrow in a lawsuit captioned NIU Holdings LLC v. AT&T Mobility Holdings, B.V.; New Cingular Wireless Services, Inc.; Nextel International (Uruguay) LLC; and Comunicaciones Nextel de Mexico S.A. de C.V., Case No. 15-10155, Adv. Pro. No. 19-01099 (SCC). The Decision granted NIU's motion for summary judgment and stated that NIU is entitled to the immediate disbursement of $65,800,288 held in the Mexico Escrow, plus prejudgment interest at nine percent per annum commencing on the respective dates when certain tax audits were indisputably final. The Bankruptcy Court directed the parties to submit an order consistent with its Decision, and AT&T took an appeal from the Decision.
The Settlement resolves the amount of security to be reserved for AT&T pursuant to the dissolution proceedings in the Delaware Court, as well as the open matter regarding the release of the funds from the Mexico Escrow before the Bankruptcy Court. The Settlement provides AT&T with $75.0 million of security for its claims in the dissolution proceedings to be held in an escrow account (the "New Escrow Account"). The New Escrow Account will be funded by $70.0 million from the Mexico Escrow and $5.0 million that AT&T will pay to NII in full settlement of the interest awarded by the Decision (the "Settlement Payment"). Funds will be released from the New Escrow Account and the amount of security reserved in the dissolution proceedings will be reduced as seven Mexican tax audits are resolved. In addition, the first $3.0 million released from the New Escrow Account will be held by NII as additional security that may be available to AT&T in the event that the New Escrow Account is exhausted. The balance of the Mexico Escrow, approximately $17.1 million, will be immediately released to NII.
As of November 30, 2020, NII had $287.0 million of total assets, including $75.0 million to be held in the New Escrow Account pursuant to the Settlement and $30.0 million currently held in an escrow account related to the sale of NII's Brazilian assets to América Móvil, S.A.B. de C.V. ("AMX"). NII has determined that an aggregate of $125.7 million is sufficient to provide security for all of its known and unknown claims. This amount is comprised of the $75.0 million related to AT&T, $30.0 million related to AMX, $2.4 million related to other known claims, $3.0 million related to potential claims that have not been made known to NII or that have not yet arisen, and $15.3 million of wind down costs and expenses, which includes a $5.0 million reserve for potential additional tax, accounting, and legal costs and potential additional personnel costs that could be incurred in connection with the dissolution, if more effort is required than currently expected.
As a result of the Settlement, NII will file a motion in the Delaware Court requesting approval of an initial distribution of $161.0 million (approximately $1.54 per share). Any distributions to NII's stockholders are subject to the direction of NII's Board of Directors and approval by the Delaware Court, and will not be made until after the Delaware Court enters an order permitting the distribution. There can be no assurance regarding the timing and provisions of the Delaware Court's order and the Delaware Court may require NII to withhold an aggregate amount of security in excess of the amount that NII currently believes is reasonably likely to satisfy NII's potential claims and liabilities. In addition, NII cannot predict the impact, if any, of the Covid-19 pandemic on the timing of proceedings in the Delaware Court, and it is possible that delays could result. There also can be no assurance as to the timing or amount of any additional distributions that NII may make as part of the dissolution process.
Based on currently available information, NII currently estimates that the total amount of distributions will be from $2.14 to $2.65 per share. The low end of the range includes a reserve of $5.0 million for additional tax, accounting and legal costs, as well as potential personnel costs that may need to be incurred in connection with the dissolution process, and a reserve of $3.0 million for currently unknown claims that may arise during the dissolution process. The high end of the range has increased from NII's previous guidance as a result of the Settlement Payment. The ultimate amount distributable to stockholders will depend on factors outside of NII's control, including, among other things, the amount of cash recovered from escrow amounts related to the sale of NII's operations in Mexico and Brazil, and could vary from NII's current estimates.
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