Globe offers to buy BayanTel’s debt

MANILA, Philippines (2nd UPDATE) – Globe Telecom Inc. has offered to buy the debt of Lopez-led Bayan Telecommunications Inc. (BayanTel) from creditors so it can proceed with a plan to acquire a stake in the company.

In a disclosure to the Philippine Stock Exchange, Globe said it launched a tender offer on Monday, November 5, to purchase up to 100% of BayanTel’s debt, including the debt of its unit Radio Communications of the Philippines Inc., for cash.

The offer will expire on midnight of December 18 (New York time), but Globe may extend it if it decides to, the company said.

The offer is “conditioned on” the acceptance by 70% of holders of BayanTel’s $200-million senior notes originally due 2006, among others.

Globe confirmed, meanwhile, that it has started separate discussions with the shareholders of BayanTel for a stake in the company and “a wide range of commercial arrangements” with it.

“The parties remain in discussions on the terms of the commercial arrangements including the price and other conditions under which the acquisition may be effected,” Globe Assistant Corporate Secretary Marisalve Ciocson-Co said.

“No definite agreement has been executed at this time,” she added.

BayanTel has been under rehabiliation since July 2004. This means any party acquiring a stake in the company must seek creditor approval first.

Under the rehab program, BayanTel settles a portion of its debt, mostly in dollar, every semester and pays interest on a quarterly basis, until the debt gets wiped out by 2023.

It remains to be a non-core business of the Lopez group, which holds an 85% interest in the phone company.

Synergies

Globe Telecom CEO Ernest Cu earlier disclosed he has had meetings with ABS-CBN Corp. chair and CEO Eugenio Lopez III for synergies in the telecom, cable and media businesses.

To start off, Globe and BayanTel agreed in October to share 10 megahertz of frequencies assigned to the latter, which should be expected to expand Globe’s network and increase the quality of its services.

Cu’s disclosure came shortly before rival Philippine Long Distance Telephone Co. (PLDT) announced it terminated similar talks with ABS-CBN’s main competitor, GMA Network Inc. PLDT had wanted to acquire GMA-7 to strengthen its foothold in the content business.

The partnerships between the telcos and media firms are being explored amid declining growth in the traditional telco business of call and text services.

PLDT chair Manuel Pangilinan had stressed such partnerships would provide companies “scale.” The bigger the assets, the more savings and the wider the reach the groups will realize.

Interest in BayanTel

Both Globe and PLDT were interested to acquire BayanTel years ago.

Saddled with debts after it couldn’t recover its investments in landlines, BayanTel was left behind by industry peers that earned a windfall from bucket-priced promos.

The PLDT group had planned to acquire a controlling stake in the Lopez-led telco by swapping its shares in unit Home Cable. PLDT president Napoloen Nazareno said then the deal didn’t push through because BayanTel’s asking price was a “bit high.”

Globe, on the other hand, had also explored acquiring BayanTel but encountered problems with negotiations with the latter’s creditors. – Rappler.com