Chile’s WOM makes $450m bond issuance

WOM is Chile’s fastest-growing mobile voice and data and mobile broadband services provider by total subscribers and revenue.

The notes were sold by a Luxembourg-incorporated issuer and are guaranteed by WOM Mobile’s Norwegian-incorporated parent company and certain of its Chilean subsidiaries.

Novator Partners advises and manages WOM Mobile.

WOM Mobile intends to use the proceeds of the offering to repay a portion of its credit facility, to finance certain purchases of Chilean spectrum and related capital expenditures and for other corporate purposes.

Earlier this month, WOM was declared the winner of the AWS band tender held by Chilean telecommunications regulator Subtel, with a proposal of 16.3 billion pesos ($22.3 million), outbidding rivals Borealnet and Claro in a tiebreaker round and snapping up the 30MHz for sale in the band.

The initial purchasers of the offering were advised by law firm Latham & Watkins, which had previously represented the initial purchasers in WOM Mobile’s $510 million debut and add-on offerings of 6.875% five-year notes.

The law firm’s team was led by partners Brett Cassidy, Matthew Schneider and Roderick Branch, with associate Phil Houten and international visiting associate Vicente Allende. Partner Bora Bozkurt, with associate Sam Yang, who advised on tax matters.

The notes issuance was assigned a B1 rating by Moody's Investors Service, with a stable outlook for the offering, which assumed that the issuance will be successfully completed.

“WOM's ratings are constrained by its modest revenue size compared with that of its global and local peers, intense competition in the Chilean telecom market and its relatively high leverage,” Moody’s said.

“Moreover, the company has only a recent track record of stronger profitability, with positive EBITDA achieved for the first time in the fourth quarter of 2017, although it is continuously improving. Accordingly, the B1 ratings also factor in the execution risks in WOM's plan to continue expanding its market share in the competitive Chilean market to extract economies of scale and reduce leverage,” the ratings firm added.

“Mitigating the risks are WOM's conservative financial policies that include maximum leverage and minimum cash levels as well as restriction in dividend payments focusing on debt repayment and deleveraging of the balance sheet.”

WOM's controlling shareholder Novator is an investment firm with around 3 billion euros of assets under management, with a focus on telecoms, including incumbents and challengers.

Kenbourne Invest was advised on the issuance by Chilean law firm Guerrero Olivos, with a team comprising partner Pedro Pellegrini, with senior associate Benjamin Novoa and junior associate Abel Ignacio Flores.

Kenbourne’s in-house team was made up of Marcelo Fica Aránguez and Raimundo Meneses Costadoat.

Law firm White & Case in London also advised Kenbourne Invest.

Carey acted as Chilean counsel to JP Morgan Securities, BofA Securities and Santander Investment Securities (underwriters) with a team led by partners Diego Peralta and Manuel José Garcés assisted by counsel Eduardo Martin and associates Felipe Tupper, Paluska Solar, Antonio Dourthe, Elías Mohor, Nadia Jara, Raúl Mazzarella and Javiera Sepúlveda.