* Geo says majority of creditors support bankruptcy plan
* Plan will give bondholders 88 percent of company stock (Adds details on restructuring agreement)
MEXICO CITY, March 20 (Reuters) - Troubled Mexican homebuilder Geo said on Thursday it has filed for bankruptcy after gaining the support of the majority of its creditors in a deal that will replace most of its debt with stock.
Geo was once Mexico’s biggest homebuilder with sales of 55,485 homes in 2012, but it has struggled with a heavy debt load and slumping home sales that pushed it to stop making debt repayments last year.
Creditors Banamex, HSBC, Banorte, Santander, Inbursa and BBVA Bancomer agreed to the bankruptcy plan, Geo said in a statement on Thursday. The deal is a so-called prepackaged bankruptcy that can shorten the duration of the legal process.
In a separate statement, the company said it reached a deal with holders of more than 50 percent of its debt, including a group of investors who hold just over 27 percent of bonds due on Sept. 25, 2014, June 30, 2020 and March 27, 2022.
Under the restructuring plan, bondholders will end up with 88 percent of the company in stock, current stockholders will be diluted to an 8 percent stake while management will hold 4 percent of stock.
The deal also includes a plan to issue 4.75 billion Mexican pesos ($358 million) in new stock in the company once the restructuring is complete.
Orlando Loera, one of Geo’s advisers, said in a telephone interview that the proceedings could be finished within four to six months. He said most of the company’s debt would be converted into stock with another part restructured into debt that will mature in between seven to 10 years.
The company had 13.81 billion pesos ($1.04 billion) in net debt at the end of the first quarter of 2013, with more than half in U.S. dollar bonds due in 2014, 2020 and 2022.
Geo has not reported financial statements to Mexico’s stock exchange since the first quarter of 2013. Trading of its shares was suspended in July.
Geo blamed its problems on a shift in government policy over the last few years that prioritized subsidies for apartment purchases by new homebuyers, damping sales of cheap houses built by Geo and closest rivals Homex and Urbi.
Urbi shares were also suspended after the company failed to report second-quarter results.
Shares of Homex, formerly Mexico’s No.2 homebuilder, were suspended after the company said it could not report fourth-quarter results by the end of February.
$1 = 13.2651 Mexican pesos Reporting by Gabriela Lopez and Elinor Comlay; Editing by Christopher Cushing and Matt Driskill