Fifteen prospective buyers analyze AT&T Latin America

AT&T Corp. has practically given up the idea of selling its 69% stake in AT&T Latin America (ATTL) to Southern Cross Group. ?Management has the obligation to represent the interests of all creditors and we must therefore maximize the value of the investment, which is only 1,000 US Dollars,? says Patrick Northland, chairman and CEO of ATTL. Fifteen prospective buyers have visited the online data room, including telcos and banks.
ATTL operates in Brazil, Peru, Chile, Argentina and Colombia, with 7,000 corporate customers in the region?s 12 largest cities, seven in Brazil alone. The idea of selling was reinforced by ATTL?s net loss of 40 million USD in fiscal 2002. It has 1.038bn USD in debts, of which 833m USD derive from parent-company loans, plus 170m USD in unpaid bills to suppliers, and 35m USD in bank debt. Patrick Northland acknowledges that the total is large compared to net worth and says he plans to eliminate over 80% through a debt restructuring plan now under development. Because it?s mostly owed to the holding company he sees no difficulty in writing that portion off.
Debt in Brazil amounts to 25m USD with three creditors ? local and foreign banks. One has agreed to reschedule and negotiations are under way with the others. João Elek, president of ATTL Brazil, says the aim is to win more time to repay but declines to disclose details.

Other options include filing for Chapter 11 protection from creditors in the U.S., which wouldn?t affect operations in the various Latin American countries, or finding a financial investor who would purchase the debt for a token amount. This resembles what happened to WorldCom in the U.S., Impsat in Latin America, Nextel Internacional, and even Vésper. All possibilities are being examined by Alix Partners and Greenhill and Co., retained as financial restructuring advisors.