September 10, 2021 – NII Holdings, Inc. (“NII”) today announced that on September 8, 2021 the Court of Chancery of the State of Delaware (the “Delaware Court”) entered an order approving NII’s reserve for potential unknown claims (the “Unknown Claims Reserve”) of $3 million. As a result, on September 9, 2021, NII filed a motion with the Delaware Court requesting approval to make an initial distribution to NII’s stockholders in the amount of up to $200.1 million ($1.91 per share).
Also, NII today announced that on September 7, 2021 NII recovered $5.2 million from the indemnification escrow account funded in connection with NII’s sale of its Mexican operations (the “Mexico Escrow Account”).
Mexico Escrow Release
As previously announced, NII 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”). The Settlement requires that funds will be released from the Mexico Escrow Account and the amount of security reserved in the dissolution proceedings will be reduced as seven Mexican tax audits are resolved.
One of the seven Mexican tax audits was resolved, and as a result, $5.2 million of the Mexico Escrow Account was released to NII on September 7, 2021 at the joint direction of AT&T and NII. As a result, $59.3 million remains in the Mexico Escrow Account. NII continues to work with AT&T and the Mexican tax authorities to resolve the remaining four tax audits.
Dissolution Update
As previously announced, on January 13, 2020, NII filed a certificate of dissolution with the Secretary of State of the State of Delaware. Further, on October 8, 2020, the Company filed a Verified Petition for Dissolution in the Delaware Court. In addition, on January 15, 2021, the Company filed a Motion for a Distribution to Stockholders and for Approval of Reserves (the “Initial Distribution Motion”) requesting that the Delaware Court enter an order granting NII’s request to make an initial distribution of $161.0 million (approximately $1.54 per share) to the Company’s stockholders and to establish a reserve of $125.7 million for the Company’s remaining known claimants and potential future unknown claimants.
Also, as previously announced, on March 22, 2021, the Delaware Court entered an Order Approving Notice and Certain Reserve Amounts and Barring Certain Claims (the “Order”). The Order approved the reserves set forth in the Initial Distribution Motion (including reserves with respect to AT&T and América Móvil, S.A.B. de C.V(“AMX”)), with the exception of the proposed $3 million Unknown Claims Reserve. On March 16, 2021, the Delaware Court entered a separate order appointing a guardian ad litem (the “Guardian”) to represent the interests of potential unknown future claimants. The Guardian was charged with investigating the nature and extent of possible unknown claims, evaluating the sufficiency of the Unknown Claims Reserve, and evaluating whether a period of time longer than five years after the date of dissolution should be used for evaluating potential unknown claims.
On September 2, 2021, the Guardian filed a report with the Delaware Court (the “Guardian Report”). The Guardian Report concluded, among other things, that an Unknown Claims Reserve of $3 million is more than adequate as a reasonable reserve for NII’s unknown claimants.
On September 8, 2021, the Delaware Court entered an order approving the Unknown Claims Reserve of $3 million. As a result, on September 9, NII filed a motion to amend certain reserve amounts and for a first liquidating distribution (the “Updated Distribution Motion”) to increase the amount of the initial distribution as a result of additional amounts that have become available for distribution since the filing of the Initial Distribution Motion. See www.nii.com for a copy of the Updated Distribution Motion.
As previously announced, NII recovered $30.1 million from an escrow account that was funded to secure its indemnification obligations related to the sale of NII’s Brazilian operations (the “Brazil Escrow Account”). Also as previously announced, NII had recovered $6.5 million from the Mexico Escrow Account, which together with the $5.2 million recovered on September 7, 2021, results in total recoveries of $11.7 million from the Mexico Escrow Account as of September 7, 2021, of which $8.7 million is currently available for distribution.
As a result of the above-mentioned escrow releases and the approval of the Unknown Claims Reserve, NII requested in the Updated Distribution Motion that the Delaware Court approve an initial distribution of up to $200.1 million to the Company’s stockholders ($1.91 per share).
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. The timing of distributions and ultimate amount distributable to stockholders will depend on factors outside of NII’s control, including, among other things, the amount of cash recovered from the Mexico Escrow Account, and could vary from NII’s current estimates.
About NII Holdings, Inc.
Visit NII Holdings’ website at www.nii.com.
NII Holdings, Inc.
1405 S Fern Street, #93001
Arlington, VA 22202
(703) 390-5100
www.nii.com
Investor Relations:
Tim Mulieri
timothy.mulieri@nii.com