Chilean telco WOM filed for Chapter 11 bankruptcy protection in Delaware, according to documents dated April 1, as per news reports.
The filing comes after the company missed a schedule to refinance $348 million in debt due in November. In its filing, WOM, which stands for "Word of Mouth," listed more than $1 billion in debt.
Company CEO Chris Bannister said that the telco sought Chapter 11 protection in a US bankruptcy court, as the company's best option to remain viable.
“The number of such actions against the company may grow in the near term if the company’s liquidity position is not immediately stabilized,” added chief restructuring officer, Robert Wagstaff.
The filing will allow WOM to continue operating while working towards paying its creditors.
WOM has blamed its financial problems on its delayed 5G rollout, while credit rating companies downgraded WOM's debt early last year, including 2024 and 2028 bonds totaling $649m, Wagstaff said.
He added that WOM has also had issues constructing telecom towers on time.
"The company has been in an international arbitration proceeding with the government of Chile over restrictions in the construction of cellular towers in certain areas of the country," he said.
"The company’s inability to build towers at the expected pace prevented the company from selling the constructed towers under the sale-leaseback agreement with Phoenix Tower International and deprived the company of an estimated $25 million in liquidity in 2023."
This downgrade led to the Inter-American Investment Corp., an affiliate of Inter-American Development Bank, to reduce its credit facility to the company, Wagstaff added.
Separately, WOM confirmed the arrangement for up to $210m in financing, from lenders led by JPMorgan Chase to fund it through bankruptcy. This remains subject to court approval.
Founded in 2015 after British private equity firm Novator Partners LLP acquired assets of Nextel Chile, the telco has become Chile's third-biggest in market share, serving more than eight million customers and employs around 7,000 people.
