June 1, 2003
Two years ago, when the key customers of the Mexican auto parts company San Luis Corp. began sharply reducing purchases, company executives thought the dip in sales would be a temporary problem. They expected that sales to Ford, General Motors and Chrysler would bounce back and believed the company could continue meeting its debt service payments. They were wrong. "The rebound never came," admits Sergio Visintini, chief financial officer of San Luis. Six months later, executives faced a stark choice as the company ran low on cash. They could either keep San Luis running, or they could pay bondholders.
On September 20, 2001, San Luis's holding company defaulted on $102 million in internatio
Latin American companies burdened with debt are struggling to keep current on their loans and bonds. Not everyone is complaining. Workouts allow operationally sound companies to stay in business and keep investment bankers and securities lawyers busy.