Chilean Telecom Wom Files For Bankruptcy Amid 348m Debt Crisis
- WOM sought bankruptcy protection in Delaware with $1-10 billion in liabilities.
- Plans to refinance $348 million debt faltered, pushing towards Chapter 11 filing.
- Acquired by Novator in 2015, WOM holds a 21% market share in Chile’s mobile sector.
WOM’s venture into the Chilean telecom scene, marked by aggressive pricing and marketing, hit a financial snag, leading to a Chapter 11 bankruptcy filing in Delaware.
The company’s audacious move to refinance $348 million in debt by November fell through, prompting this strategic pivot to reorganize its hefty liabilities, ranging between $1 billion and $10 billion, alongside an equal bracket of assets. This legal maneuver aims to shield WOM from creditor pressures while it devises a repayment strategy, underpinned by a $200 million lifeline from JPMorgan, earmarked for operational sustenance.
Founded on the premise of disrupting Chile’s telecom oligopoly, WOM’s strategy hinged on affordable plans and vibrant marketing. However, the firm’s cash reserves dwindled amid a fierce battle to retain market influence, exacerbated by the declining value of its 2024 bonds, which plummeted below 30 cents on the dollar. This financial distress signals deepening liquidity issues and sets the stage for potential restructuring conversations with bondholders.
Originating from the assets of Nextel Chile, WOM, acronymous with “Word of Mouth,” emerged under the stewardship of Novator Partners LLP and the vision of Thor Bjorgolfsson. Despite challenging incumbents like Movistar and Entel, securing a 21% stake in the mobile market, WOM now navigates through financial turbulence, reflecting the volatile dynamics of Latin America’s telecom sector.
