Willcom Inc., a struggling telecommunications company, filed Thursday for bankruptcy protection with the Tokyo District Court.
The provider of personal handy-phone system services, a no-frills, low-cost mobile telephone system, hopes to tap a government-backed turnaround body for funds to help turn around its fortunes.
The company is about ¥206 billion in debt, the most for any telecommunications carrier, according to credit research company Tokyo Shoko Research.
In addition to asking for help from Enterprise Turnaround Initiative Corp. of Japan, Willcom will seek funds from sponsors, including mobile phone carrier and Internet conglomerate Softbank Corp. and investment fund Advantage Partners LLP.
Sources said earlier that ETIC, which is financed by the government and private financial institutions, is expected to decide by Feb. 25 whether to sponsor Willcom’s rehabilitation.
“We will pursue restructuring measures through support from our sponsors and also work hard to secure aid from ETIC,” Willcom President Yukio Kubota said at a news conference after the court protection filing, noting ETIC’s support in its rehabilitation process is “important.”
But he stopped short of providing any details regarding a rehabilitation plan or whether Willcom is asking for investment or loans from ETIC.
As of January, Willcom had roughly 4.3 million subscriptions, of which about 4.2 million were for PHS services.
Willcom aims to keep its operations intact while pushing forward bold restructuring measures under a transparent court-led process.
The firm is now 60 percent owned by U.S. private equity firm Carlyle Group, while Kyocera Corp. owns a 30 percent stake and KDDI Corp. holds the remaining 10 percent stake.
Willcom’s decision to file for bankruptcy protection is a step further than the “alternative dispute resolution” arbitration scheme it sought in September. Under the scheme, a noncourt third-party acts as an intermediary between the company and its creditors to enable the suspension of loan payments.
But the ADR led to a fall in customers, complicating Willcom’s talks with creditor banks on compiling a rehabilitation plan, so it sought support from ETIC earlier this year.
“After we filed for the ADR, it became hard to attract new customers and it was hard to rehabilitate on our own,” Kubota said.
Kubota declined comment on previous media reports that Willcom will be split into two, with one company handling existing PHS services and the other focusing on faster next-generation services, saying that this will be discussed further with its sponsors.
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