Chile’s WOM files Chapter 11 bankruptcy with over $1 billion in debt

By Sarah Lizee

Olympia, Wash., April 1 – WOM SA, formerly known as Nextel SA, filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the District of Delaware.

The Chilean telecom operator said in court documents that it made the filing in large part because of liquidity constraints and threats to the company from its Chilean creditors.

The company said that it estimates that there is $120 million in outstanding past-due payments to vendors and others.

Some of the company’s Chilean unpaid creditors have initiated at least six ongoing executive proceedings and made at least two attempts to force the debtors into liquidation proceedings in Chile, WOM said.

The company said it was able to resolve those proceedings from moving forward, but the threat remains and the number of actions against WOM may grow soon if its liquidity position isn’t stabilized.

The company’s prepetition capital structure includes $356 million of notes due 2024, $293 million of notes due 2028, a $39.2 million securitization facility, a $10.9 million Banco de Credito e Inversiones loan, $17.5 million in Inter-American Development Bank receivables and $337 million in other unsecured debt.

The company said it explored various out-of-court financing options, including a capital raise to refinance its 2024 notes, but those efforts were ultimately unsuccessful.

WOM launched a further process in March to raise either out-of-court financing or an in-court debtor-in-possession facility. The company said the out-of-court proposals it received weren’t actionable within the timeframe needed to address its liquidity needs.

DIP financing

The company has lined up a $210 million multi-draw term loan DIP facility with JPMorgan Chase Bank, NA as administrative agent and TMF Group New York, LLC as collateral agent.

Interest will be 10% per annum. Fees include a 1% exit fee, a 3% unused commitment fee and a 1% maturity extension fee,

The facility is set to mature on July 1 if not extended.

Other details

In its petition, the company listed $1 billion to $10 billion in assets and $1 billion to $10 billion in liabilities.

The largest unsecured claims come from trustee U.S. Bank Wealth Management, based in Boston, with a $356.28 million 2024 unsecured bond claim and a $292.57 million 2028 unsecured bond claim; BCI Factoring SA, based in Santiago, Chile, with a $44.61 million bank/trade claim; China Construction Bank Corp., based in Shenzhen, China, with a $29.13 million bank/trade claim; and Phoenix Tower International Chile SpA, based in Santiago, Chile, with a $25.92 million trade claim.

The Santiago, Chile-based company filed Chapter 11 bankruptcy under case number 24-10628.

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