Telefónica Perú has filed for voluntary insolvency proceedings in order to address the financial restructuring of its operations, as reported by the teleco through the Comisión Nacional del Mercado de Valores (CNMV) late on Friday.
“In order to achieve an orderly restructuring of Telefónica del Perú’s liabilities, the Board of Directors of Telefónica del Perú has agreed today to submit Telefónica del Perú to the ordinary insolvency proceedings established in Peruvian law. Telefónica del Perú’s application to such bankruptcy proceeding is aimed at the financial restructuring and restructuring of its operations within the applicable bankruptcy legal framework”, states the text sent to the CNMV.
In this context, Telefónica Hispanoamérica has granted a goodwill facility to the Peruvian subsidiary of up to 1,549 million Peruvian soles, around 400 million euros at current exchange rates, for a period of 18 months.
The purpose of the credit line granted by Telefónica Hispam to the Peruvian subsidiary is to maintain operations and to be able to reach a solution, although the funds will only cover operating cash needs.
Telefónica Perú has stressed that the filing for bankruptcy proceedings is mainly due to the financial and administrative situation that the subsidiary has been going through for two decades due to its controversies with the National Superintendence of Customs and Tax Administration (SUNAT) in the country.
“As is publicly known, Telefónica del Perú’s financial situation has been very negatively affected by tax contingencies that are more than 20 years old, as well as by administrative decisions that have placed the company at a competitive disadvantage in a particularly challenging market environment,” adds the statement sent to the CNMV.
“In relation to the aforementioned tax contingencies, Telefónica is currently in arbitration before the International Centre for Settlement of Investment Disputes (ICSID),” he adds.
On the other hand, the company stressed that Telefónica Perú’s liabilities “are not guaranteed by any other entity of the Telefónica group” and that it will continue to “explore strategic alternatives” for its subsidiary in the South American country, such as, for example, a possible sale.
In this regard, the entry of Telefónica Perú into bankruptcy proceedings does not imply a suspension of services or an immediate liquidation.
“The company will continue to provide uninterrupted service to its more than 13 million customers in urban and rural areas of Peru,” the subsidiary said in a statement.
“After evaluating different alternatives to ensure the financial stability of the company, we came to the conclusion that voluntarily entering into the PCO (insolvency proceedings) is the best way to protect the provision of telecommunications services to Peruvians. We are focused, together with employees and suppliers, on guaranteeing the long-term permanence of Telefónica del Perú (…) by fulfilling our regulatory commitments,” said Elena Maestre, executive president of Telefónica Perú.
The company has also informed that it has hired the services of the financial advisory firm Kroll to organize the process and, in fact, a member of this firm will join the team as Restructuring Director.
