UPDATE 2-Mexico’s Comerci sees court decision, store growth

* Sees finishing debt restructuring in 6 months

* Expects to generate enough cash to pay debt

* Forecasts stronger-than-expected store growth

* Comerci shares rise 2 pct
(Recasts to add new store plans, adds details on expansion,
payments, stock quote)

By Cyntia Barrera Diaz

MEXICO CITY, July 15 (BestGrowthStock) – Retailer Comercial
Mexicana said on Thursday it expects its restructuring to
finish in about six months as it lines up cash to meet debt
payments and open more stores than analysts forecast.

Comerci (COMEUBC.MX: ) defaulted on its obligations in late
2008 following heavy losses on currency derivatives bets,
triggering a bitter battle with its creditors.

On Wednesday, Mexico’s No. 3 supermarket chain finally
submitted a prepackaged debt restructuring before a local court
in a landmark test of the country’s insolvency laws. It plans
to repay creditors about $1.5 billion over eight years.

Comerci expects a Mexican judge to give the final approval
to the restructuring by year end. The retailer will then file a
Chapter 15 in the United States for a judge there to clear the
process according to U.S. law.

Jose Calvillo, which has overseen the restructuring for
nearly two years, told reporters on Thursday that Comerci will
generate at least 4.3 billion pesos ($335 million) in free cash
flow in 2010 and the figure will expand in line with sales
growth in coming years.

Investors welcomed the news, sending Comerci’s shares up 2
percent in Mexico City. The stock was up 1.36 percent to 11.91
pesos in afternoon trading on Thursday.

Comerci same-store sales, which measure performance at
stores that have been open for at least 12 months, are seen
rising as much as 2 percent in 2010 and 3 percent next year.

“We think the economic recovery is going to start reaching
clients’ pockets,” Calvillo said.

Analysts were concerned the company would use most of its
cash to serve its debt obligations, leaving it with little
money to open two new stores per year in a competitive market.

“Around 60 percent of the cash flow will go toward debt
service,” Calvillo said.

Comerci plans to open at least six stores and three
restaurants per year in 2011 and 2012. The company has seven
store formats, from bare-bone bodegas with very cheap products
to fancy gourmet supermarkets. It also has a 50-50 venture with
U.S. warehouse giant Costco (COST.O: ) to operate its namesake
stores in Mexico.
($1 = 12.84 pesos)
(Editing by Gary Hill)

UPDATE 2-Mexico’s Comerci sees court decision, store growth