Slow Sales and Lawsuits Hit Mexico's Homebuilders Gabriela Lopez - Reuters
go to original May 17, 2013

MONTERREY, Mexico - Struggling with slowing home sales and a lack of liquidity, Mexico's top three homebuilders may have to seek bankruptcy protection if they fail to reach an agreement with creditors in the short term.

Home sales at Geo, Urbi and Homex plummeted in the first quarter, exacerbating the companies' long-running cash shortfalls and, in some cases, leading them to miss payments on debt and derivatives.

Analysts are sceptical that restructuring efforts will work, arguing that at least in the cases of Geo and Urbi, the companies will likely have to rely on protection under Mexico's version of U.S. Chapter 11, known as Concurso Mercantil.

"The homebuilders have a very heavy debt load ... about 20 (percent) to 30 percent of their total debt, mostly bank debt, is due in the next 18 months," said Marco Medina, an analyst at Ve por Mas. "They need a quick fix. They have limited time."

An Urbi spokesman said the company is not planning to file for bankruptcy, and was instead working to recalibrate its debt.

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