In a message to its suppliers, the CEO of WOM Chile assured that “this decision will allow the company to work with creditors and other interested parties, access new funding sources, and have the necessary tools to support its long-term growth."
Following a series of woes revealed in recent weeks -- including a large debt, lack of liquidity, and cease of payments to vendors -- it was confirmed today that telecommunications company WOM submitted a request for voluntary reorganization under Chapter 11 of the Bankruptcy Law in the United States.
Through a message to its main vendors, WOM Chile's CEO, Chris Bannister, assured that “this decision will allow the company to work with creditors and other interested parties, access new sources of financing, and have the necessary tools to support its long-term growth.”
“This process will also allow WOM to continue providing its service uninterruptedly to its more than 8 million customers,” he added.
The company also revealed that JPMorgan would provide it financing through a “Debtor In Possession” figure in the amount of US$200 million to improve liquidity and support operations while they go through Chapter 11.
“The beginning of this process does not imply the liquidation or bankruptcy of the company,” a press release issued by the company emphasized, adding that “the proximity of the bond maturity date, high interest rates and a difficult credit market, among other factors, put pressure on WOM Chile's liquidity in the short term."
REMOVAL OF EXECUTIVES
Banister, known as “Uncle WOM”, returned last October to head the telco after the resignation of the previous CEO, Sebastián Precht.
This return brought with it the removal of five senior executives along with more than a hundred other layoffs, all with the need to “return WOM to its roots and its challenging mentality.” At the time Bannister also complained about annoying calls from other companies' telephone agents and their spam practices, but several LinkedIn users also criticized WOM sales agents for doing the same.
Now, WOM's head stated that voluntarily filing for Chapter 11 “is the best option to protect the value of the company.”
“We are focused on maximizing WOM's long-term commercial potential, continuing to provide the best service to our clients, protecting our collaborators, fulfilling our commitments to the government, and ensuring that we have adequate liquidity to invest in our future growth,” he concluded.
White & Case, LLP, Richards, Layton & Finger, PA, and Carey will be legal advisors during the process. Riveron Consulting will serve as financial advisor and Rothschild & Co. as investment banker.
NC Telecom AS acquired Nextel Chile in 2015 from a US parent company at a time when it had only 200,000 subscribers and changed its name to WOM, building a dynamic organization and instilling a challenging, customer-focused culture that has enabled the business to grow to more than 6 million subscribers. Today, WOM is the fourth telco in that country.
