A surprise for the telecommunications market. América Móvil and Telefónica announced on Monday that they had reached a non-binding agreement to “to jointly explore their potential participation in the sale process of the assets of Wom and its affiliates“, they declared.
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Wom has been in the process of judicial reorganization for five months through Chapter 11 of the United States Bankruptcy Law. In order to solve its financial problems, the company owned by Icelandic businessman Thor Björgólfsson opened up to the possibility of selling assets, whether part to a strategic partner or the entire firm.
There were already rumors of interest in the multinational firm of Mexican businessman Carlos Slim, América Móvil, which controls the merger of ClaroVTR in Chile. However, Telefónica had not been involved in the operation. The telecommunications company from Spain, which operates in Chile under the name Movistar, will now seek to jointly explore with the Mexican company its options to acquire Wom assets.
The non-binding agreement implies that the parties may or may not submit an offer. In the event of doing so, the offer and transaction potential “will be subject to the bidding procedures and the regulatory rules and authorizations required under the reorganization procedure of WOM SA and under the applicable sectoral and competition rules, including the prior authorization of the National Economic Prosecutor’s Office of Chile,” the companies said in a statement.
They added: “The interest of both companies in jointly exploring their potential participation in the sale process of the assets of WOM SA and its affiliates in Chile, lies in the potential benefits that the transaction could generate for their clients and Chilean consumers in general, given that “The sustainability of the telecommunications sector would be strengthened by increasing the capacity to continue investing and competing in high-speed and high-coverage networks, which are key to the digitalisation of the country.”
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Regarding this announcement, Wom stated that it “maintains its focus on maximizing its operational and financial results, and the value for all its stakeholders. Within the framework of the reorganization process in the US, there is a process in which different interested parties can present reorganization proposals. This process is supervised by a Special Committee of the WOM Board of Directors made up of independent directors and specialized advisors. It is also reviewed by the federal court in Delaware. Until its conclusion, WOM does not express any opinion on the interest that this process undoubtedly arouses.”
It is worth mentioning that Wom has not yet confirmed that the sale of assets is the final solution to its financial problems that pushed it into judicial reorganization.
The process of seeking interested parties for the firm’s assets was initiated in July by the Rothschild bank. The current CEO of the company controlled by the British Novator Partners, Martín Vaca, said that a list of 98 potential investors had been defined.
The deadline for receiving non-binding offers is estimated to be September 9, while The deadline for binding applications is November 15. Sources close to the matter said the special committee is expected to evaluate bids submitted between December this year and January 2025, but the dates are subject to change depending on how the process progresses.
Although it has already had to delay the initial dates (non-binding dates scheduled for August 9 and binding dates for October 13) by about a month, the company intends to develop this process quickly, given the high costs of a Chapter 11 process in the United States. The most immediate reference was Latam Airlines, which spent more than US$ 200 million in its financial reorganization process in the United States.
Rothschild, for example, submitted a bill in June more than US$ 3.1 millionfor financial management and advisory services. According to documents filed by Wom with the Bankruptcy Court, “the total fees paid by the Debtors to the Investment Bankers for all services rendered during the pendency of these Chapter 11 Cases pursuant to Section 4 of the Engagement Letter (…) will not exceed US$15,750,000″In addition to Rothschild, Wom hired RP Financial Advisors during this same period.
