CDB provides first, $145 million loan to WOM for unspecified purposes (Linked to Record ID#104762 and #104763)

CDB provides first, $145 million loan to WOM for unspecified purposes In January 2016, WOM S.A. -- a private telecommunications company headquartered in Chile -- signed a loan agreement with China Development Bank providing two loans worth $145 million each. The purposes of the loans were unspecified, but they likely served as general working capital.

The first loan, captured via Record ID#103708, carried an interest rate of LIBOR plus a 4% margin. Repayments were to be made quarterly. The final maturity date was in August 2025, indicating a 9.58-year maturity period.

The first interest payment (worth $5,800,000) was made on August 15, 2016, indicating a (possibly de facto) grace period of 7 months (0.58-years). By the end of 2017, $141,835,000 had been disbursed. Funds had been fully disbursed by December 31, 2018. The second loan, captured via Record ID#104762, carried an interest rate of LIBOR plus a 3.75% margin.

Repayments were to be made quarterly. The final maturity date was in August 2026, indicating a 10.58-year maturity period. By the end of 2017, $51,315,000 had been disbursed. By the end of 2018, $143,509,000 had been disbursed. Loan proceeds had fully disbursed by September 30, 2019.

On April 14, 2016, the loans were collateralized via the establishment of first-degree non-possessory pledges (in favor of Banco Santander Chile as agent for and representative of China Development Bank Corporation) on 210,469,238,899 shares of WOM Mobile S.A. (the holding company of WOM S.A.) and 935,550,088,583 shares issued by WOM S.A.

Other sources of collateral for the loans, established at an unknown time prior to December 31, 2016, include mortgages on property located at Calle Rosas 2451; a first-ranking pledge without conveyance on communication towers and other company’s assets; and a first-ranking pledge without conveyance on credits considering all rights to receive payments, interest, credits and accounts receivable that the company has or will have.

The loan agreement that issued the January 2016 loans also included two specific covenants regarding debt obligations.

WOM was required to report to CDB twice a year that the net debt to equity ratio did not exceed 2:1 at any time and the debt service coverage ratio was not lower than 1.2:1 on or after June 30, 2019.

Then, on January 4, 2019, WOM S.A. obtained a third, long-term loan from CDB for $125 million, captured via Record ID#104763. This loan was intended to finance WOM's infrastructure investment plan. It carried an interest rate of LIBOR plus a 3.5% margin and had its final maturity date in January 2027.

Then, on November 26, 2019, WOM S.A. prepaid the full amount outstanding on the two January 2015 loans, as well the third acquired from CDB on January 4, 2019.

This consisted of $359,888,000 in remaining principal and $5,468,000 in accrued interest, break costs, and a prepayment premium.

The prepayment was made using proceeds from a USD $200 million loan and a bond issuance by SPV Kenbourne Invest S.A. guaranteed by WOM S.A. and its holding company, WOM Mobile.