Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 1 of 26
`
`IN THE UNITED STATES BANKRUPTCY COURT
`FOR THE DISTRICT OF DELAWARE
`
`
`In re:
`
`WOM S.A., et al.1
`
`
`
`
`
`
`
`
`
`)
`) Chapter 11
`)
`
`) Case No. 24-______ (___)
`)
`
`)
`(Joint Administration Requested)
`)
`
`
`Debtors.
`
`DECLARATION OF ROBERT WAGSTAFF IN SUPPORT OF
`DEBTORS’ CHAPTER 11 PETITIONS AND REQUESTS FOR FIRST DAY RELIEF
`
`I, Robert Wagstaff, declare pursuant to 28 U.S.C. § 1746 as follows:
`
`
`
`I am a Managing Director at Riveron RTS, LLC (“Riveron”) and the chief
`
`restructuring advisor for debtor WOM S.A., a business corporation domiciled in Chile (“WOM”)
`
`and its debtor affiliates (together with WOM, the “Debtors”). I am authorized to submit this
`
`declaration (this “Declaration”) on behalf of the Debtors in the above-captioned chapter 11 cases
`
`(the “Chapter 11 Cases”).
`
`
`
`I submit this Declaration in support of the Debtors’ voluntary petitions for relief
`
`under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), and certain “first-
`
`day” relief requested in motions filed contemporaneously herewith (the “First Day Motions”). If
`
`called as a witness, I would testify competently to the facts set forth in this Declaration.
`
`
`
`This Declaration is divided into five parts. Part I provides background information
`
`about myself. Part II is an introduction regarding these Chapter 11 Cases. Part III provides
`
`background information about the Debtors, their business operations, and their corporate and
`
`
`1 The debtors in these chapter 11 cases (these “Chapter 11 Cases”), and each debtor’s federal tax identification
`number in their applicable jurisdiction of incorporation, are as follows: Kenbourne Invest S.A. (2018 2206 815);
`NC Telecom II AS (59.208.720-0); WOM Mobile S.A. (99.517.000-0); WOM S.A. (78.921.690-8); Conect S.A.
`(96.965.220-k); and Multikom S.A. (78.456.640-4). The location of the debtors’ service address in these Chapter
`11 Cases is: General Mackenna No. 1369, Santiago, Chile.
`
`
`
`
`
`RLF1 30766724v.1
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 2 of 26
`
`capital structures. Part IV describes the circumstances leading to the commencement of the
`
`Chapter 11 Cases and an overview of the Debtors’ prepetition negotiation efforts. Part V affirms
`
`the facts that support the relief requested in the First Day Motions.
`
`I.
`
`Background of Declarant
`
`
`
`In my role as a restructuring advisor, I am responsible for, and am materially
`
`engaged with, the Debtors’ operational and financial management including, among other things:
`
`(a) restructuring activities and initiatives of the Company; (b) cash management and liquidity
`
`forecasting; and (c) vendor management and stakeholder communications.
`
`
`
`Riveron was engaged by the Debtors and their non-Debtor affiliates (collectively,
`
`the “Company”) in January 2024 to provide restructuring advisory services. This involved,
`
`among other things, working with management, the Debtors’ boards of directors, and the Debtors’
`
`other advisors to design and implement a restructuring strategy and assist the Debtors in their
`
`contingency planning efforts. Since commencing its engagement, Riveron has evaluated the
`
`Debtors’ financials and operations, assisted in the Debtors’ strategic alternatives and financing-
`
`related workstreams, and worked closely with the Debtors’ management and other restructuring
`
`professionals. Riveron is well-acquainted with the Debtors’ capital structure, liquidity needs, and
`
`business operations. I have led the Riveron team since the inception of the engagement.
`
`
`
`I have more than 25 years of financial and operational experience, spanning a wide
`
`range of industries in the United States and Latin America. I specialize in assisting distressed
`
`companies in all areas of operational and financial restructuring, and have advised debtors,
`
`creditors, investors, and court-appointed officers in multiple chapter 11 bankruptcy cases and out-
`
`of-court matters. I have previously held senior positions with Berkeley Research Group LLC,
`
`
`
`
`2
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 3 of 26
`
`Frontera Capital Advisors, FTI Consulting, and Sitel Group. I have a Bachelor of Commerce
`
`degree in Accounting from Concordia University.
`
`
`
`I am familiar with the Debtors’ day-to-day operations, business affairs, and books
`
`and records, as well as the circumstances leading to the Debtors’ Chapter 11 Cases. Except as
`
`otherwise stated, the statements set forth in this Declaration are based on (a) my personal
`
`knowledge, (b) my discussions with members of the Debtors’ senior management and advisors,
`
`(c) my review of relevant documents, or (d) my opinion, based on my experience and knowledge
`
`of the Debtors’ operations and financial conditions. In making this Declaration, I have relied in
`
`part on information and materials that the Debtors’ personnel and advisors have gathered,
`
`prepared, verified, and provided to me, in each case, under my supervision, at my direction, and
`
`for my use in preparing this Declaration.
`
`II.
`
`Introduction
`
`
`
`WOM (f/k/a as Nextel Chile S.A., or “Nextel Chile”) is one of the fastest growing
`
`and market-leading Chilean telecommunications providers, focused on offering mobile voice,
`
`data, and broadband services, along with a rapidly expanding “Fiber to the Home” (“FTTH”)
`
`broadband offering, to consumers and businesses in Chile. Since the acquisition of Nextel Chile
`
`in 2015 through Novator Partners LLP’s investment vehicle NC Telecom AS, WOM has expanded
`
`from having virtually no market share to establishing itself as the second-largest mobile network
`
`operator in Chile. As of December 2023, the Debtors’ total customer base is comprised of over
`
`8.5 million customers and has rapidly grown to approximately 31% of port-in market share across
`
`pre- and post-paid customers. The Company expanded its offerings to include FTTH broadband
`
`service in 2020, and 5G for its mobile network in 2022. As of September 2023, WOM has the
`
`largest 5G coverage area and the fastest mobile network in Chile.
`
`
`
`
`3
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 4 of 26
`
`
`
`As of the Petition Date, the Company’s 5G wireless broadband services deliver
`
`internet access to approximately one million customers, with a coverage area that spans over 18
`
`million people. The Company holds spectrum in four bands, including 3G, 4G, and 5G networks,
`
`which corresponds to approximately 25.8% of all spectrum for mobile services in Chile. Along
`
`with providing extensive coverage, large download capacity, high speeds and stable connectivity,
`
`the Company provides 4G network coverage to 99% of Chile through national roaming agreements
`
`with certain other mobile companies operating in Chile.
`
`
`
`The Company has faced liquidity challenges for the past year. In March 2023, Fitch
`
`downgraded the 2024 and 2028 unsecured U.S.-dollar-denominated notes issued by Kenbourne
`
`Invest S.A. (“Kenbourne”) to B+/RR4 from BB-, with a negative rating outlook. The downgrade
`
`cited an uncertain path to deleveraging in issuing the downgrade.
`
`
`
`The downgrade had multiple impacts on liquidity. First, it triggered a margin call
`
`on the Company’s CLP/USD derivative contracts, resulting in a use of cash of more than $35
`
`million between April and November 2023, when the Company closed out its remaining hedged
`
`positions. The downgrade also caused the Inter-American Investment Corporation, an affiliate of
`
`Inter-American Development Bank (“IDB”), to reduce its credit facility to the Company from
`
`$100 million to $50 million, depriving the Company of a vital source of liquidity to finance the
`
`customer receivables generated from the remaining collections on the sale of handsets (as further
`
`described below). After a second downgrade in the Company’s bonds in November 2023, IDB
`
`closed the credit facility altogether. Since then, the Company has been paying down the remaining
`
`balance to IDB, absorbing another $35 million in liquidity between November 2023 and March
`
`2024.
`
`
`
`
`4
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 5 of 26
`
`
`
`The delayed rollout of the Company’s 5G network buildout also negatively affected
`
`liquidity in 2023. 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 (as further described below). 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 (as further described below) and deprived the
`
`Company of an estimated $25 million in liquidity in 2023.
`
`
`
`Since November 2023, given these negative impacts on liquidity, and faced with a
`
`tight credit market and an uncertain path to refinancing the Company’s 2024 Notes (as defined
`
`below) with a maturity in November 2024, the Company has had to resort to expensive, short-term
`
`local financing to finance its operations. It has also extended payment terms to suppliers to manage
`
`liquidity. Despite management’s efforts to reduce costs, including through payroll reductions, the
`
`combination of the negative impacts above on the Company’s liquidity caused the Company to
`
`explore restructuring alternatives.
`
`
`
`Prior to the commencement of these Chapter 11 Cases, the Company pursued a
`
`capital raise to redeem its 2024 Notes (as defined below) and provide additional cash to its balance
`
`sheet. To assist with those negotiations and analyze the Company’s liquidity position and cash
`
`flow projections, Rothschild & Co, through its UK entity N.M. Rothschild & Sons Limited
`
`(“Rothschild”), was hired as the Company’s investment banker. The Company also hired other
`
`restructuring advisors, including Riveron, to develop and help implement options for a potential
`
`restructuring of all its financial indebtedness in parallel with the discussions regarding the capital
`
`raise.
`
`
`
`
`5
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 6 of 26
`
` While the Company and its advisors explored various out-of-court financing
`
`options including a potential capital raise to refinance the 2024 Notes, such financing was
`
`ultimately unsuccessful. In light of its continued stressed liquidity position, the Company launched
`
`a further process in March 2024 to raise either out-of-court financing or an in-court debtor-in-
`
`possession (“DIP”) facility. After evaluating all available options, the Company determined that
`
`the out-of-court proposals it had received were not actionable within the necessary time frame for
`
`needed liquidity or imposed unacceptable conditions to funding and instead the Company turned
`
`to potential Chapter 11 Cases and obtaining a DIP facility to address the Company’s funding needs.
`
`
`
`The most immediate issue for the Debtors is to obtain liquidity to ensure sufficient
`
`working capital to efficiently operate its business and administer their estates. Among the
`
`payments that need to be made on an expedited basis are amounts owed to employees, foreign and
`
`third-party vendors, and taxing authorities, among others, who provide the essential services or
`
`authorizations needed to operate, maintain, and protect the value of the Debtors’ assets. While
`
`those parties are essential to the prospects of success for these Chapter 11 Cases, many of these
`
`foreign parties also have no known material ties to the United States and so the Debtors have no
`
`assurances that such parties will respect the automatic stay or this Court’s orders.
`
`
`
`Thus, to ensure that there is sufficient liquidity to maintain operations with minimal
`
`disruption and maximize the value of their estates, and as explained in the DIP Motion (as defined
`
`below) and the declaration of Marcelo Messer (the “Messer Declaration”)2 filed in support
`
`thereof and concurrently herewith, the Debtors seek approval of a debtor-in-possession financing
`
`facility (the “DIP Facility”) from JPMorgan Chase Bank, N.A. (the “DIP Agent”).
`
`
`Capitalized terms used, but not otherwise defined herein shall have the meanings ascribed to them in the DIP
`2
`Motion and/or the Messer Declaration, as applicable.
`
`
`
`
`6
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 7 of 26
`
`
`
`As further described in the Messer Declaration and the DIP Motion (as defined
`
`below), the DIP Facility is a multi-draw term loan facility in the aggregate principal amount of up
`
`to $210 million. The DIP Facility will, among other things, permit the Debtors to continue to fund
`
`their operations during the pendency of these Chapter 11 Cases and provide the Debtors with the
`
`funds that are critical to the Debtors’ efforts to maximize and preserve value for their stakeholders
`
`during these Chapter 11 Cases.
`
`
`
`On April 1, 2024 (the “Petition Date”), the Debtors each filed voluntary petitions
`
`for relief in the United States Bankruptcy Court for the District of Delaware (the “Court”), thereby
`
`commencing the Chapter 11 Cases. To ease their transition as debtors in possession, the Debtors
`
`subsequently filed the First Day Motions.
`
`III. The Debtors’ Business Operations
`
`A.
`
`The Debtors’ History and Business Overview
`
`
`
`In
`
`late 2014,
`
`the Chilean government began discussions with private
`
`telecommunications firms to implement a national plan to improve the nation’s wireless
`
`infrastructure. In 2015, these discussions were formalized by Chile’s Secretary of Digital
`
`Development in a new program, the Digital Agenda 2020, based on five pillars: rights to digital
`
`development, universal connectivity, digital government, development of the digital economy, and
`
`the improvement of digital competencies in education and labor. As stated, in 2015, the Company,
`
`through Novator Partners LLP’s investment vehicle NC Telecom AS, acquired Nextel Chile’s
`
`assets from NII Holdings Inc. and began operations in the Chilean telecommunications market.
`
`
`
`The Company quickly established itself as Chile’s fastest-growing mobile services
`
`provider in terms of total subscribers and revenues. Among other services, the Company’s key
`
`revenue generating business consists of mobile voice and data services and mobile broadband
`
`services to individuals and small and medium enterprises in Chile. In addition, the Company
`
`7
`
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 8 of 26
`
`recently expanded its portfolio of services to include a rapidly growing, fully owned FTTH
`
`broadband network offering in 2020 and 5G capabilities for its mobile network in 2022.
`
`
`
`As of the end of 2023, the Company provided services to approximately 8.5 million
`
`subscribers, which corresponds to approximately 25.8% of the Chilean market share for 3G / 4G /
`
`5G mobile services, consolidating its position as the second largest mobile telecommunications
`
`provider in the country. The Company was also awarded the title of fastest and top-rated mobile
`
`network in Chile for the first half of 2023 by Ookla.3
`
`
`
`The Company’s offerings and services are marketed through a combination of their
`
`distribution network of physical stores and kiosks, a significant number of which are in prime
`
`locations across Chile. The Debtors currently operate 93 of WOM-branded stores and various
`
`small business owners and companies operate the remaining 112 stores and kiosks. The Debtors
`
`exercise significant control over their distribution network through the direct leasing of all store
`
`locations, including those operated by local partners. The Debtors maintain strong remote sales
`
`channels, which include their website, mobile applications, and call center. Such remote sales
`
`through online transactions or telesales represent approximately 35% of the Debtors’ sales.
`
`
`
`The Company also holds several concessions granted by the Ministry of
`
`Transportation and Telecommunications (Ministerio de Transportes y Telecomunicaciones de
`
`Chile) (“MTT”), the country’s transport and telecommunications regulator, in advanced wireless
`
`services and radio spectrum in densely populated areas of Chile. These concessions include
`
`concessions in connection with WOM’s fiber optic network (“FON”) and its deployment of its 5G
`
`program in specified regions of Chile. In April 2020, WOM was awarded five out of six macro
`
`
`Ookla provides solutions for both crowdsourced and controlled network testing, along with comprehensive
`3
`global insights on network conditions, quality of service (QoS), and quality of experience (QoE).
`
`8
`
`
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 9 of 26
`
`zones following a spectrum auction in 2021 to complete its 5G deployment project. Due to post-
`
`pandemic shipping restrictions and delays, social unrest in various parts of Chile, and
`
`administrative delays in connection with securing specific additional permits, WOM had achieved
`
`an overall completion rate of approximately 80% by the target completion deadline of October 7,
`
`2023, which covers three out of five macro zones in Chile. WOM continues to execute on this
`
`project in the two remaining macro zones.
`
` WOM and the Undersecretary of Telecommunications (Subsecretaría de
`
`Telecomunicaciones de Chile) (“SUBTEL”), the telecommunications arm of the MTT, have
`
`disputed the justifications for the non-completed portion of the project and continue to discuss
`
`alternatives to overcome this dispute. The Company has taken all relevant legal action to preserve
`
`its rights in connection with this dispute. WOM also possesses licenses, permits, registrations, and
`
`other grants from many governmental units in Chile that permit it to conduct its business.
`
`
`
`In July 2022, the Company entered into a sale and leaseback agreement with
`
`Phoenix Tower International (“PTI”), a global tower infrastructure operator, to sell 3,800 of its
`
`network towers to PTI. Pursuant to this transaction, the Company sold a total of 2,597 network
`
`towers for a net payment of approximately $670 million in 2022, of which $385 million were used
`
`to make distributions to the Company’s shareholders and approximately $285 million to repay debt
`
`and implement operational improvement initiatives. The agreement contemplates a further sale of
`
`1,203 network towers from the Company by December 31, 2024 for which the Company would
`
`receive additional proceeds in connection with such sale. The PTI leaseback agreement is an 8-
`
`year agreement with an automatic two-year renewal.
`
`
`
`As of the Petition Date, the Debtors’ workforce consists of approximately 7,000
`
`employees and independent contractors, all of whom are based in Chile, including executives,
`
`
`
`
`9
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 10 of 26
`
`officers, managers, sales staff, administrative support staff, and other personnel working in
`
`marketing, maintenance, finance, accounting, human resources, and other key functions. The
`
`Debtors’ workforce performs a variety of critical functions for the Debtors’ business, as the
`
`employees’ and independent contractors’ skills, specialized knowledge of the Debtors’ business
`
`model, industry, and operations, as well as their relationships with vendors and customers, are
`
`essential to the value of the Debtors’ business. Without their support and dedication to ensure the
`
`continued operation of their businesses, the Debtors would be unable to effectively reorganize.
`
`
`
`As noted, the most pressing issue for the Debtors is the outstanding trade and
`
`ordinary course operating payables for which immediate liquidity is essential. To the best of my
`
`knowledge, a significant amount of the vendors and service providers that supply the Debtors with
`
`essential goods and services, including utilities, advertising services, and telecommunication
`
`services, and specialized resources for the Debtors’ businesses are non-U.S. vendors, mostly
`
`located in Chile. As far as the Debtors can discern, these parties lack material contacts with the
`
`United States and may assert that they are not subject to the jurisdiction of this Court or the
`
`provisions of the Bankruptcy Code, particularly the automatic stay, that otherwise protect the
`
`Debtors’ assets and business operations.
`
`
`
`Despite the global reach of the automatic stay, there is a credible risk that these
`
`foreign vendors will commence enforcement actions, including local attachment and liquidation
`
`proceedings, against the Debtors in Chile or another foreign jurisdiction, or exercise other self-
`
`help remedies in an effort to recover their prepetition payments, including refusing to provide
`
`goods or services due under an executory contract, failing to deliver goods or provide services that
`
`are required for the day to day operations of the Company, or refusing to provide goods and
`
`services other than upon receipt of immediate cash payments. Given the importance that these
`
`
`
`
`10
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 11 of 26
`
`non-U.S. creditors play in the Debtors’ businesses, a local action taken by any one of them against
`
`the Debtors or their property in Chile, including terminating contracts or ceasing to do business
`
`with the Debtors, could endanger the operations of the Debtors’ businesses and the prospects of
`
`success for these Chapter 11 Cases.
`
`B.
`
`Corporate Structure
`
`
`
`The Company consists of eleven (11) entities: six Debtors and five non-Debtors
`
`that have not filed petitions for relief and are not a part of these Chapter 11 Cases (collectively,
`
`the “Non-Debtor Affiliates”). The Non-Debtor Affiliates include: (a) Telco Holdings
`
`Investments S.à.r.l., a corporation formed under the laws of Luxembourg; (b) Chilli Equity SA, a
`
`corporation formed under the laws of Luxembourg; (c) Chilli JV S.à.r.l, a corporation formed
`
`under the laws of Luxembourg: (d) Chilli Investments Cyprus Limited, a business entity formed
`
`under the laws of Cyprus; and (e) NC Telecom AS, a business entity formed under the laws of
`
`Norway.
`
`
`
`NC Telecom AS is the direct parent of Debtor NC Telecom II AS (“NC Telecom
`
`II”), a business entity formed under the laws of Norway. NC Telecom II wholly owns Debtor
`
`Kenbourne Invest S.A. (“Kenbourne”), a business corporation under the laws of Luxembourg.
`
`
`
`The Debtors’ operations are mainly performed by WOM S.A., one of the four
`
`Debtors incorporated in Chile. The other three Chilean Debtors are: (a) WOM Mobile S.A.
`
`(“WOM Mobile”), (b) Conect S.A. (“Conect”), and (c) Multikom S.A. (“Multikom”). A chart
`
`depicting the Company’s organizational structure as of the Petition Date, including the Non-Debtor
`
`Affiliates, is attached hereto as Exhibit A.
`
`
`
`
`11
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 12 of 26
`
`C.
`
`Prepetition Capital Structure
`
`
`
`As of the Petition Date, the Debtors have approximately $679 million of funded
`
`debt obligations, approximately 95% of which is unsecured, and other third-party obligations:4
`
`i. EF Securitization Facility
`
`
`
`On January 18, 2024, WOM, as borrower, and EF Securitizadora S.A. (“EF”), as
`
`trustee, entered into a Framework Agreement (Contrato Marco para la Cesión de Créditos y
`
`Derechos sobre Flujos de Pago) (as amended, restated, supplemented or modified through the
`
`Petition Date, the “EF Framework Agreement”). In addition, EF, as issuer, and Banco de
`
`Crédito e Inversiones (“BCI”), as representative of certain bondholders are parties to an Issuance
`
`Agreement (Contrato de Emisión Desmaterializada de Títulos de Deuda de Securitización con
`
`Formación de Patrimonio Separado por Línea), dated as of January 18, 2024 (as amended,
`
`restated, supplemented or modified through the Petition Date, “EF Securitization Agreement”
`
`and, together with the EF Framework Agreement and related transaction documents, the “EF
`
`Securitization Documents”). The EF Framework Agreement provided approximately $51
`
`million, of which the Company received (a) $26 million by offsetting a previous bridge loan,
`
`including payments costs, (b) $15 million in Junior Bonds (as defined below), and (c) $10 million
`
`in cash (the “EF Securitization Facility”). Under the Company EF Securitization Documents,
`
`the Debtors have the obligation to sell and assign certain receivables to EF, until the Debtor’s
`
`obligations under the transaction documents are met (the “EF Transfers”). Moreover, the
`
`
`4 The descriptions herein of the Company’s debt, including any security in respect of such debt, are provided for
`the convenience of the Court and parties in interest. In certain cases, amounts stated are approximate. The
`descriptions are not intended to be comprehensive nor should they be construed as an admission with respect to
`the terms, amount, validity or enforceability of any debt, any lien or security, or any other right or obligation.
`These descriptions are qualified in their entirety by the operative relevant debt and related documents. The
`Debtors and their advisors are continuing to review their debt obligations and related matters and expressly reserve
`all rights relating thereto.
`
`
`
`
`12
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 13 of 26
`
`obligations owed to EF are secured by first priority liens on, and security interests in, certain bank
`
`accounts and contracts (collectively, the “EF Liens”).
`
`
`
`In particular, the EF Liens granted by Debtor WOM under the EF Securitization
`
`Documents to or for the benefit of EF as security for the EF Secured Obligations (as defined in the
`
`EF Securitization Documents) encumber agreements with banks and other servicing channels who
`
`receive the payments of certain accounts receivable (the “EF Receivables”) and certain pledged
`
`bank accounts in which payment for such EF Receivables is received.
`
`
`
`Parallel to this transaction, EF issued approximately (a) $39 million in senior
`
`secured bonds (the “Senior Bonds”) and (b) $15 million in subordinated unsecured bonds (the
`
`“Junior Bonds”). The Senior Bonds were purchased by Moneda S.A. Administradora General de
`
`Fondos by assigning and offsetting the $26 million bridge loan it issued to the Company on
`
`November 29, 2023 and the balance in cash. Such obligation shall be satisfied through the funds
`
`from the EF Receivables. The Junior Bonds were acquired by the Company and will be paid off
`
`using the excess EF Receivables only after the Senior Bonds are paid in full. As of the Petition
`
`Date, approximately $39 million is outstanding on account of the EF Transfers.
`
`ii.
`
`The Senior Notes
`
`
`
`Debtor Kenbourne is the issuer of two series of senior unsecured notes. Pursuant
`
`to the indenture dated November 26, 2019 (the “2019 Indenture”), Kenbourne issued the 6 7/8%
`
`Senior Notes (the “2024 Notes”) due November 2024 for the principal amount of $450,000,000.
`
`Pursuant to the indenture dated January 22, 2021 (the “2021 Indenture”), Kenbourne issued the
`
`4.7% Senior Notes due 2028 (the “2028 Notes” and together with the 2024 Notes, the “Senior
`
`
`
`
`13
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 14 of 26
`
`Notes”) for the principal amount of $450,000,000.5 U.S. Bank National Association (the “Senior
`
`Notes Trustee”) is the indenture trustee in respect of the Senior Notes. All of the other Debtors
`
`are obligors in respect of the Senior Notes. The 2019 Indenture and 2021 Indenture are governed
`
`by New York law. As of the Petition Date, approximately $356 million in principal and accrued
`
`and unpaid interest was outstanding under the 2024 Notes and approximately $293 million in
`
`principal and accrued and unpaid interest was outstanding under the 2028 Notes.
`
`iii.
`
`The Bank Loans
`
`
`
`On March 29, 2023, WOM entered into a loan agreement with Banco Scotiabank
`
`for a principal amount of approximately $4.4 million, which was paid in full in October 2023.
`
`There are no further obligations in connection with this loan.
`
`
`
`On April 6, 2023, WOM entered into a loan agreement with, and issued a
`
`promissory note (pagaré) to the order of, BCI for a principal amount of $10 million and with a
`
`maturity date of April 1, 2024, plus interest accrued thereon (the “BCI Loan”). As of the Petition
`
`Date, approximately $10.9 million of principal and accrued and unpaid interest was outstanding
`
`under the BCI Loan.
`
`iv.
`
`Intercompany Transfers
`
`
`
`As further set forth in greater detail in the Debtors’ Cash Management Motion (as
`
`defined below) filed concurrently herewith, from time to time, a Debtor will transfer funds through
`
`the Cash Management System to another Debtor (such transfers among Debtors, the
`
`“Intercompany Transfers”). The Intercompany Transfers are used to ensure adequate funding
`
`for each Debtors’ obligations, including, but not limited to, funding debt repayments.
`
`
`5 The Senior Notes are listed and quoted on the Singapore Exchange (SGX). An ad hoc group of holders or
`investment managers for holders of the Senior Notes (the “Ad Hoc Group of WOM Bondholders”) is
`represented by Dechert LLP and Ducera Partners LLC.
`
`14
`
`
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 15 of 26
`
`v.
`
`IDB Receivables
`
`
`
`The Company also maintains an accounts receivables transfer agreement with Inter-
`
`American Investment Corporation, an affiliate of IDB. Under such agreement, WOM agreed to
`
`sell to IDB, from time to time, receivables arising from the sale of (a) mobile equipment devices
`
`and other equipment necessary to connect to broadband networks and (b) cloud, data and other
`
`digital services for personal and corporate consumers (such receivables, the “IDB Receivables”).
`
`WOM, acting as collection agent, periodically remits the IDB Receivables to IDB (the “IDB
`
`Transfers”). As such, certain of WOM’s receivables are property of IDB and WOM only acts as
`
`a pass-through entity with respect to the IDB Receivables.
`
`
`
`Upon WOM’s receipt of the relevant purchase amount, all right, title and interest
`
`in, to and under each such IDB Receivables is sold, assigned and transferred to IDB. WOM has
`
`an obligation in favor of IDB to pay or procure the payment of each payment amount. WOM’s
`
`obligation to remit payments to IDB may be discharged only by complete performance and
`
`survives the termination or default under the relevant documents regarding the IDB Receivables.
`
`Notably, the IDB Receivables documents provide that WOM’s obligation to remit the IDB
`
`Receivables to IDB must continue until complete performance, even in the event of a bankruptcy
`
`filing by WOM.
`
`
`
`Although WOM no longer initiates new sales of IDB Receivables to IDB, the
`
`Debtors estimate that that amounts outstanding to be transferred by the Debtors on account of the
`
`IDB Transfers total approximately $17.5 million.
`
`vi. Other Unsecured Debt
`
`
`
`As of the Petition Date, the Debtors’ books and records list approximately $337
`
`million in non-contingent, undisputed, liquidated unsecured debt to vendors, taxing authorities,
`
`employees, and other contract counterparties.
`
`
`
`
`15
`
`
`
`
`
`

`

`Case 24-10628-KBO Doc 3 Filed 04/01/24 Page 16 of 26
`
`
`
`The following chart provides an approximate summary of the Debtors’
`
`indebtedness as of the Petition Date:
`
`Facility
`
`Debtor
`Borrower(s)/Issuer(s)
`
`Debtor Guarantors
`
`EF Securitization Facility WOM
`2024 Notes
`Kenbourne
`
`2028 Notes
`
`Kenbourne
`
`
`BCI Loan
`IDB Receivables
`Other Unsecured Debt
`TOTAL
`
`WOM
`WOM
`N/A
`
`
`
`
`WOM
`- NC Telecom II
`- WOM Mobile
`- WOM
`- Conect
`- Multikom
`- NC Telecom II
`- WOM Mobile
`- WOM
`- Conect
`- Multikom
`N/A
`N/A
`N/A
`
`
`Principal
`Amount
`Outstanding (in
`USD)
`$39.2 million
`$356 million
`
`$293 million
`
`$10.9 million
`$17.5 million
`$337 million
`$1,053.6 million
`
`IV. Circumstances Leading to These Chapter 11 Cases
`
`
`
`In the past few years, as part of its plan to expand its portfolio of customer services
`
`and increase its market share, the Company made certain significant investments aimed at
`
`improving wireless infrastructure in Chile, which were necessary, among other things, to allow the
`
`Company to participate in bidding for 5G frequencies, as well as to support the growth of its
`
`consumer base. Against this backdrop, the Company suffered certain financial setbacks, including
`
`the downgrading of its debt as well as the delayed rollout of the Company’s 5G net