Globe sweetens tender offer to remaining Bayan creditors

MANILA, Philippines – The telecommunication unit of the Ayala business group has dangled more sweeteners to its tender offers to holders of debt instruments of the Lopez business group’s cash-strapped telco arm.

On Wednesday, December 5, Globe Telecom Inc, a joint venture between diversified conglomerate Ayala Corp. and Singapore Telecommunications Inc., told the Philippine Stock Exchange (PSE) that it has amended its earlier cash offer to all the holders of Bayan Telecommunications’ remaining 13.5% senior debt notes due 2006.

This is part of Globe’s moves to become the major creditor of Bayan, which remains under rehabilitation after its debts ballooned to unsustainable $325 million level in 2003. Bayan has paid off most of the debts but the entry of Globe means the Ayala unit will assume the creditors’ role in the rehab plan.

Globe’s new cash offer for the holders of Bayan debt notes involve settling each of the US$1,000 remaining principal amount of notes for $310–the high end of the range of its previous offer. Globe earlier said approximately 91.6% of the aggregate remaining principal amount of some $184.5 million notes have been tendered and not withdrawn. 

The tender offer was launched by Globe last November 6 for the outstanding notes and bonds of Bayan as well as Radio Communications of the Philippines Inc. (RCPI). 

Globe is now also waiving its previous requirement that 70% of RCPI’s debt holders must participate in the tender offer.

Globe also said it now expects that the settlement date of the tender offer will occur not later than 21 December. Previously, this deadline was set for November 27 then moved to December 18.

Globe and Bayan already share radio frequencies to ease congestion problems, particularly those experienced by Globe’s subscribers. The National Telecommunications Commission (NTC) has given both the go-signal to proceed with this plan.

Aside from this telco deal, the two business groups are also keeping lines open to possibly expand their negotiations and include the Lopez’s media unit, ABS-CBN Corp.

Globe’s rival, the Pangilinan-led Philippine Long Distance Telephone Co. (PLDT), has pursued a similar convergence strategy with its purchase of ABC Development Corp, the operator of TV5. The PLDT group’s talks with GMA-7, a rival of ABS-CBN, was not successful this 2012.

The top 2 Philippine telecommunications firms saw a drop in profits in the first 9 months of 2012 as competition continued to heat up and eat into their margins.

Globe reported that net income after tax for the period dropped 15% to P6.8 billion from P8 billion last year. PLDT only saw a 6% slip, but Globe attributed their greater drop to the high cost of upgrading their network to improve service in the longterm. – Rappler.com