By Gabriel Moreno
MEXICO CITY, July 26 (Reuters) - Mexico's only truckmaker, Consorcio G Grupo Dina, is betting it will win a $123 million suit against Canada's Western Star Trucks and plans to use any damages to get back on its feet after its assets dwindled to almost nothing over the past two years.
Mauricio Mendoza, Dina's in-house legal counsel, said in an interview that a hearing of its case against the Canadian company for allegedly unilaterally breaking a contract to purchase trucks will begin in a Los Angeles court in October.
Dina claims it was significantly affected after it lost a contract to build 9,000 trucks for Western Star Trucks in July 2000 when the Canadian company was acquired by Freightliner LLC, a unit of Germany's DaimlerChrysler , the world's largest truckmaker.
"We are very confident that we can win. We are sure that the law is on our side. We feel that we are protected by both Mexican and international trade legislation," Mendoza said.
Officials at Freightliner and DaimlerChrysler did not respond to interview requests.
The contract with Western Star Trucks would have lasted some 10 years and involved the export of high-technology units for sale in Canada, the United States and Australia, Mendoza said.
It came at a time when Dina was already on shaky ground and was barely holding its own following the 1995 Mexican peso devaluation.
These days, Dina is a shell of its former self. Only 25 staff -- all administrative - are left at the company, compared to 3,250 employees in 1999.
The company's four major plants, where it assembled trucks, motors, chassis's and plastic parts, have all been sold to pay off debts of almost $1 billion.
COME BACK
Now the company is dreaming of a come-back and hoping that a successful lawsuit against Western Star Trucks could help put it on its way.
"We could think about manufacturing urban buses...not the big trucks, but normal trucks, like the ones you see on the streets carrying soft drinks," said Mendoza.
On July 19, the company began to buy back shares that had been delisted from the Mexican stock exchange since August 2001 and which were in the hands of minority shareholders.
The total cost of the buy-back, which includes the repurchase of American Depositary Receipts (ADRs), is about $2.6 million and accounts for 45 percent of the company's total outstanding shares.
Holders of ADRs have until Aug. 14 to convert their receipts to Mexican peso-denominated shares.
The buy-back plan comes as Dina is stubbornly dodging a bankruptcy bullet that has been chasing it since June 1999, when it had to sell off most of its controlling stake in U.S. coachmaker Motor Coach to pay off more than $700 million in debt.
Despite the pay-out, Dina still holds $164 million in debt that comes due in the form of a convertible bond as of 2004.
Mendoza said that Dina has refused to declare bankruptcy and is negotiating a liquidation of the bond in exchange for its remaining stake in Motor Coach.
"By early August we could restructure the bond in such a way that we would be practically debt-free," said Mendoza.
"We may even be able to get back into business."