WOM Chile reaches key restructuring agreement with noteholders

Chilean operator WOM said it reached an agreement with an ad hoc group (AHG) of noteholders that includes a capital injection of up to US$500mn.

WOM is currently undergoing a Chapter 11 bankruptcy protection process in the United States.

The AHG holds approximately 60% of the company’s unsecured notes. 

The deal, which consists of a plan sponsor agreement (PSA) and backstop commitment agreement (BCA), values the company at US$1.6bn and is subject to US Bankruptcy Court approval.

“The entry into the PSA and the BCA by the AHG and the company reflects a strong show of support from WOM’s largest creditor constituency, providing the company with a significant new money commitment,” said WOM CEO Martín Vaca Narvaja in a statement.

The US$500mn rights offering will be fully backstopped by the AHG. It consists of US$95mn of new secured notes due 2030 and up to US$405mn for up to 92% of the reorganized company’s common equity on a fully diluted basis, but prior to dilution from any management incentive plan. 

“[The deal] also establishes a clear path to deleveraging our balance sheet, fully funding our business plan, including the remainder of our 5G buildout, and offering meaningful recoveries to all unsecured creditors,” Narvaja added.

A net reduction of WOM’s financial debt by approximately US$650mn is also part of the deal. 

WOM expects to exit Chapter 11 in early 2025.

At the end of September, WOM had 21.9% of the Chilean mobile market, behind leaders Entel (32.3%) and Movistar (23.7%), while ahead of Claro with 19.8%, according to the latest figures from sector regulator Subtel.