Ayala, Lopez groups want Bayantel’s debt restructured

The groups file a motion before the rehabilitation court seeking the restructuring of Bayantel's $423.3-M debt

MANILA, Philippines – Ayala-led Globe Telecom Inc. has started the process of taking over cash-strapped Bayan Telecommunications Inc. (Bayantel) of the Lopez Group as it sought the restructuring of the telco’s $423.3-million debt.

In a joint disclosure to the Philippine Stock Exchange, Globe compliance officer Marisalve Ciocson-Co and Lopez Holdings Corp. corporate secretary Enrique Quiason said both Globe and Bayan Telecommunications Holdings Corp. filed a motion before the rehabilitation court seeking to restructure the financial obligation of Bayantel.

“The motion seeks to significantly restructure Bayantel’s financial debt in order to prevent the recurrence of default and ensure Bayantel’s continued viability. The joint motion is intended to achieve a successful rehabilitation of Bayantel at the earliest possible date.”

Bayantel has reportedly settled a total of P8.19 billion in debt since it filed for corporate rehabilitation in 2003. The process intends to wipe out its $325 million outstanding debt by 2023.

The current outstanding principal amount of Bayantel’s debt stands at $423.3 million and this will be reduced to $131.3 million upon a full debt-to-equity conversion as part of the restructuring.

Globe will convert up to 69% of the outstanding debt into Bayantel shares.

“Bayantel’s operations have not generated sufficient revenue to continue making the debt payments under its existing rehabilitation plan. This has been attributed to a decline in revenue from traditional fixed line services offered by Bayantel, increasing competitive pressures in the telecommunications industry and Bayantel’s inability to make any considerable capital investments while under its high debt burden,” Quiason said in the disclosure.

Ciocson-Co said such restructuring would allow Globe and Bayantel to further strengthen collaborative efforts in terms of local exchange networks, corporate data and broadband businesses.

Globe currently holds approximately 96.5% of Bayantel’s debt following a successful tender offer to creditors.

“Ensuring that Bayantel remains a going concern would allow both companies to become more competitive in the current industry environment. On the part of Bayantel, a restructuring of its debt and the entry of Globe as a shareholder as well as a Creditor will enable Bayantel to unlock and maximize potential of its key business assets and capabilities, and help accelerate its rehabilitation,” she added.

Earlier, Globe chief financial officer Alberto de Larrazabal said the company wants to complete the takeover of Bayantel within the year to pave the way for an early exit from the ongoing rehabilitation program.

The takeover will have to be approved by the rehabilitation court as well as the state-run National Telecommunications Commission (NTC) since it will involve change in ownership.

The NTC earlier approved Globe’s application for the joint use by Globe and Bayantel of Bayantel’s frequencies. – Rappler.com

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