AT&T Latin America Corp. said yesterday that it converted the involuntary bankruptcy case filed by its creditors last week into a voluntary one that gives the company more control over the process.
The company had liabilities of $1 billion and assets of $600 million, and it had already been in the process of preparing for a filing, company spokesman Marcelo Esquivel said, when one of the Washington-based firm's secured creditors, Matlin Patterson Asset Management, petitioned the U.S. Bankruptcy Court for the Southern District of Florida to force a reorganization, in order to protect its own investments from other creditors.
Converting the action to a voluntary filing represents only a technical difference for the company but gives it a little more control over the bankruptcy process, Esquivel said. The voluntary Chapter 11 filing was converted for its main business, and the company is considering options for its Argentine unit, which is still under the involuntary filing, he said.
AT&T Latin America, which is 69 percent owned by AT&T Corp., lost its parent company's financial support last October, leaving the company with a $40 million funding gap, Esquivel said. Economic difficulties in South America, particularly in Brazil, also contributed to the firm's troubles and forced the company to lay off 35 percent of its 1,800-person staff, he said. AT&T Latin America employs about 40 people in Washington, he said.
The company, which provides telecommunications service in major cities in Argentina, Brazil, Chile, Colombia and Peru, is continuing to look for a potential owner or investor for the company, and the timing of a sale would not be affected by the bankruptcy filing, the company said in a news release.
AT&T Latin America also announced yesterday that it expects its first-quarter revenue to drop to about $39 million for the quarter ended March 31, compared with $44.2 million a year earlier. The company said its earnings before interest, taxes, depreciation and amortization and before restructuring charges will be between 8 percent and 12 percent of revenue. The company, which reported $33.5 million in cash at the end of the year, also said it ended the first quarter in a stronger cash position than previously expected.
AT&T Latin America has 140,000 customers, including 5,400 data and Internet business customers.