(Bloomberg) -- Chile’s WOM won court approval to exit bankruptcy proceedings after it agreed to a takeover and restructuring bid from a group of creditors, eight months after filing for Chapter 11.
US bankruptcy judge rejected an objection to the takeover bid by a rival group of creditors, according to a statement from the company. The offer represented the only viable option for WOM to exit Chapter 11 proceedings, the tribunal said.
The decision is a “landmark in the Chapter 11 process and the efforts we have made as a team to financially restructure the company,” said Martín Vaca Narvaja, WOM’s CEO. The agreement “assures the operational continuity of WOM Chile.”
The company received the takeover bid from a group of bondholders in December, which included $500 million in new investment, valuing WOM at $1.6 billion. The investment will be implemented through a securities offering, which includes $95 million in new bonds due 2030 and up to $405 million intended for the acquisition of up to 92% of the shares of the reorganized company. About $200 million of debtor-in possession financing will be paid in cash and the plan will result in a net reduction of debt of approximately $650 million.
WOM, which stands for “Word of Mouth,” was created after Novator Partners LLP acquired the assets of Nextel Chile in 2015 and re-branded the unit. Novator was founded by Icelandic businessman Thor Bjorgolfsson. The company has about a fifth of the market for mobile phones in Chile, lagging only Telefonica SA’s Movistar and Entel SA, according to data through June collected by the local regulator. ClaroVTR, which is controlled by Mexican billionaire Carlos Slim, trails in fourth place.
WOM’s former CEO Chris Bannister acted as an adviser for the transaction without “any role or function” in the company, a spokesperson for the company told Bloomberg News in December. Bannister exited the company in May.
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