Bondholders Report Iusacell Loses Bid to Throw Out Suit.

NEW YORK -- Grupo Iusacell, S.A. de C.V., Mexico's mobile phone company controlled by Ricardo Salinas Pliego, lost its bid to persuade a U.S. court to throw out a lawsuit by holders of a $150 million defaulted bond issue. Judge Bernard Fried's July 21, 2004 ruling allows holders of around 32 percent of the $150 million Iusacell Celular notes to pursue their claims in New York State Supreme Court, including specific performance claims against Iusacell such as the granting of first priority liens on a pari passu basis with other lenders. The judge identified the interest of the New York court, "sitting in one of the financial capitals of the world, in adjudicating actions where the parties have chosen New York as the forum to resolve disputes." The judge's decision affirms that Iusacell waived its right to litigate claims under the governing bond indenture in any forum outside of New York. Judge Fried also ruled that the plaintiffs may maintain their claims to seek specific performance against Iusacell.

The decision clears the way for the lawsuit initially filed in January 2004 to proceed against Iusacell in New York Supreme Court. The holders of the bonds include funds and accounts managed by Gramercy Advisors LLC, TCW Asset Management Company, TCW Investment Management Company, and Agave Telecom Holdings LLC.

"The Mexican press recently quoted an Iusacell officer, Director General Gustavo Guzman, stating that the company would rather 'invest in technology than pay debt.' With that kind of attitude, it is clear that creditors have little recourse but to pursue the remedies provided under our bond indenture as governed by New York law," said Robert L. Rauch, Managing Director of Gramercy Advisors.

Grupo Iusacell Celular, the operating subsidiary of Grupo Iusacell, has total indebtedness of around US$425 million, including a secured syndicated loan of US$266 million and the US$150 million of secured bonds. In addition, holding company Grupo Iusacell has a structurally subordinated US$350 million bond that matures in 2006. Ricardo Salinas Pliego controls other NYSE-listed Mexican companies such as Grupo Elektra and TV Azteca and took control of Grupo Iusacell in July 2003.