AT&T LatAm may be headed for bankruptcy

AT&T Latin America Corp. posted a net loss of Godzilla proportions in its third quarter, and warned that it could be forced to seek bankruptcy protection during this current quarter, the company announced Thursday.

Net loss came in at US$532.3 million, or $4.48 per share, orders of magnitude higher than the $0.60 per share expected by one Wall Street analyst polled by Thomson Financial/First Call. The net loss in the third quarter, ended Sept. 30, compares with a much smaller net loss of $79.7 million, or $0.69 per share, in last year’s third quarter. Revenue was $39.9 million, a 1.7 per cent increase over last year’s third quarter.

The company, which provides telecommunication services to businesses in five Latin American countries, also announced that its total debt as of Sept. 30, stood at $849.1 million, which includes $603.9 million from parent company AT&T Corp. and $162.4 million in financing from equipment vendors Lucent Technologies Inc., Nortel Networks Corp. and Cisco Systems Inc.

Because AT&T Latin America isn’t meeting the minimum revenue targets it committed to as part of the vendor financing arrangements, the vendors in question could “commence foreclosure proceedings on the company’s assets,” the company said in Thursday’s statement.

AT&T Latin America is also in default of other credit agreements which would allow those lenders to seek remedies against the company. In that case, AT&T Latin America “would likely need to seek protection from its creditors under U.S. bankruptcy laws and/or under the laws of the countries in which it operates, potentially during the fourth quarter,” the company said in Thursday’s statement.

For the full year, AT&T Latin America expects revenue to be in the range of $160 million to $170 million. It operates in Chile, Colombia, Argentina, Brazil and Per