AT&T Latin America Corp., which is under Chapter 11 bankruptcy protection, has signed a purchase agreement with telecommunications company Embratel Participacoes SA.
AT&T Latin America, which provides telecommunications services to businesses in several Latin American countries, also filed the necessary motions with the U.S. Bankruptcy Court for the Southern District of Florida, AT&T Latin America announced Wednesday.
Embratel, which signed the agreement Tuesday, would acquire all of AT&T Latin America, including its operating subsidiaries in Argentina, Brazil, Chile, Colombia and Peru, the five countries in which AT&T Latin America offers its services, such as voice, data, Internet and videoconferencing.
Before the Embratel purchase goes through, an auction process has to be held to give other interested parties a chance to bid for AT&T Latin America. The bankruptcy court’s approval is also necessary.
AT&T Latin America, based in Washington, D.C., expects the transaction to be finalized within the next two months. Its biggest investor is AT&T Corp., which has indicated it wants to sell its 69 per cent stake in AT&T Latin America, an AT&T Corp. spokeswoman said Wednesday. AT&T Corp. no longer has representation on AT&T Latin America’s board, nor is AT&T Latin America an AT&T Corp. unit, the spokeswoman said.
AT&T Latin America announced it might be headed towards bankruptcy in November 2002, when it posted a gigantic third-quarter net loss of US$532.3 million, which compared with US$79.7 million in the previous year’s third quarter. The company blamed the disastrous results on sagging sales and on decisions made by AT&T Corp., such as to not help AT&T Latin America with its taxes and to not provide AT&T Latin America with additional financing or credit support.
Embratel, the former long-distance monopoly in Brazil, now also provides Internet and data services. Its controlling stakeholder is WorldCom Inc. As of mid-2003, Embratel, based in Rio de Janeiro, had about 11,400 employees.