Globe sees no hindrance to Bayan takeover

MANILA, Philippines – Globe Telecom Inc. expects its planned acquisition of cash-strapped Lopez-owned Bayan Telecommunications Inc. to go smoothly.

Globe President and CEO Ernest Cu said the company is looking to merge with Bayan after successfully buying out 96.5% of the latter’s outstanding bondholders.

“Certainly, if an agreement is reached that would be the path,” Cu said.

Cu did not provide a timetable for the merger, but he earlier told Rappler an equity deal might happen within the first quarter of 2013.

He said the company does not see any hindrance to the proposed transaction, like what Pangilinan-led Philippine Long Distance Telephone Co. (PLDT) faced when it bought Digital Telecommunications Philippines Inc. (Digitel) from the Gokongwei group.

“It doesn’t create a monopolistic type of structure unlike the PLDT-Digitel deal since frequencies will still be below our [competitor’s]. We don’t anticipate any issues that they can bring up,” Cu said.

Globe paid a discounted $130 million for the $430-million worth of debt Bayan and unit Radio Communications of the Philippines Inc. owed creditors.

When Globe first announced the tender offer for Bayan’s debt, it also disclosed it began talks with the Lopez group for an equity investment in the company.

Cu revealed that talks are ongoing over a wide range of commercial arrangements. “But no definite agreement has been reached,” he noted.

Amended rehab plan

The Globe CEO also revealed plans to file for an amendment of Bayan’s rehab plan to ensure its long-term viability.

Since Bayan’s corporate rehabilitation in 2004, the debt-ridden telco has reportedly settled P8.19 billion in debt. The company intends to pay its outstanding $325 million debt by 2023.

Globe CFO Alberto De Larrazabal said Globe, which is now Bayan’s biggest creditor after the debt buyout, is reviewing the 2023 deadline of the rehabilitation as well as the level of debt that Bayan pays that is currently pegged at 60% of principal amount. – Rappler.com