Compañia de Teléfonos de Chile (CTC) is a telecommunication company based in Chile. By the late 1980s, Chile did not have a broad telecommunications network. The country ranked only 12th out of 24 Latin American and Caribbean nations. They were a state-owned corporation that experienced a below average record for servicing customer needs. Hundreds of thousands of potential customers had been on the waiting list for service for several years. Due to the underdevelopment of telecommunications, need for expansion and a mediocre record at servicing customers’ needs, was evidence that the privatization of CTC was an unavoidable option for the Chilean government. In 1987 government put CTC up for bid to attract a firm that would be able to expand, modernize and improve their telecommunications network, and also offer them some financial security. Bond Company submitted an all-cash bid of $114.8 million for 151 million shares of CTC’s stock and was accepted. By 1988 Bond owned 49.5% of CTC stock. They planned to increase the number of service lines, add cellular service and high-speed data transmission networks.

Why does CTC need funds? Are internal funds sufficient to meet the needs? Can CTC raise funds in its own country? What are the potential sources of funds in Chile?

In April of 1990 CTC had embarked upon an aggressive expansion program that required substantial capital resources putting the company into a financially challenging dilemma. The expansion program had been approved under Alan Bond, an Australian entrepreneur. The plan included reducing substantially the time to get telephone service (from 10 years to 4 years), and expanding capabilities to provide some of the latest high-tech capabilities that telecommunications had to offer. Facing significant financial difficulties of his own, Mr. Bond sold his stake in the telephone company in April