ICA Cuts Jobs Ahead of Creditor Talks on Biggest Mexico Default

(Bloomberg) -- Empresas ICA SAB cut its technical and administrative workforce in half this year as the builder braces for talks with bondholders after defaulting on $1.35 billion in overseas bonds last year.

The company is "preparing to initiate a negotiation" with creditors and readying a restructuring plan, according to a statement Monday by ICA. The builder’s net loss almost doubled to 4.97 billion pesos ($241.9 million) in the third quarter, dragged down by a foreign-exchange loss and other items, according to a filing.

ICA ceased payments on the bonds as the government cut back infrastructure projects and a plunge in the Mexican peso worsened the burden from the company’s dollar-denominated debt. The default was the biggest by a Mexican corporation since Moody’s Investors Service started tracking the information in 1995. Guadalupe Phillips was named chief executive officer earlier this month after Luis Zarate died in October.

"The operating results continue being weak and we reiterate the complicated situation the company is in: highly indebted and with liquidity problems that affect the results," Banorte-IXE analyst Jose Espitia wrote in a note to clients. "The main focus remains on details of its financial restructure plan."

The number of technical and administrative employees fell to 1,773 at the end of September, from 3,619 at the beginning of the year, according to the filing, which didn’t give an overall company headcount. ICA had 15,775 workers at the end of June, according to data compiled by Bloomberg.

ICA declined 4.7 percent to 2.82 pesos at 10:23 a.m. in Mexico City, after falling as much as 5.1 percent.

To contact the reporter on this story: Andrea Navarro in Mexico City at anavarro30@bloomberg.net. To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Bruce Rule