Globe to buy out Lopezes in Bayan in 2013

MANILA, Philippines – Ayala-led Globe Telecom Inc. expects to complete its buyout of the Lopezes in cash-strapped Bayan Telecommunications Inc. (Bayan) this 2013.

Speaking at a press briefing on Tuesday, April 16, Globe chief finance officer Alberto de Larrazabal said how much Globe will end up owning and by when are dependent on the court, which will decide on Bayan’s rehabilitation plans.

“It is fair to assume that it (the buyout) will be completed within the year,” he said.

Globe, which is looking to acquire a “majority” stake in Bayan, is currently working with the courts to arrive at an agreement on the latter’s rehabilitation plans. 

“What is currently provided under the current rehab plan is only up to 40%,” Larrazabal noted. 

Globe had bought out 96.5% of Bayan’s outstanding debts and was hoping to convert these into equity ownership.

Previously, Globe President and CEO Ernest Cu said the company was looking to merge with Bayan after it bought out Bayan’s bondholders.

“Certainly, if an agreement is reached that would be the path,” Cu said. The Globe CEO had 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, according to its previous rehabilitation plan.

“We hope to be able to file within a few weeks. From there on, it follows a court process, which is a bit harder to determine,” said Larrazabal.

According to Larrazabal, once the court process is over, they will seek approval from the National Telecommunication Commission (NTC) because there will be change in ownership of a franchised entity.

“The aggregate debt that was purchased by Globe was close to a cost of $130 million. That’s over $400 million at face value. We have not yet finalized how much will be subject to conversion,” he said.

According to Larrazabal, the deal will allow Globe to tap into their corporate database and make use of their connectivity in Quezon City.

“They (Bayan) have a very good corporate database. That will be good for our own enterprise data business. They also have fibre in Quezon City, areas we don’t have. It’s a nice acquisition all around from a different perspective,” he said. – Rappler.com