Court clears Globe’s takeover of Bayantel
(UPDATED) The rehabilitation court says the debt-to-equity deal is good to go

MANILA, Philippines (UPDATED) – The acquisition of the ailing Bayan Telecommunications Inc. (Bayantel) of the Lopez Group has begun as Ayala-led Globe Telecom Inc. got the green light from the Pasig City regional trial court.

This clears the way for Globe’s takeover of the debt-laden Bayantel. The two have a debt-to-equity conversion deal that allows Globe to acquire controling stake — about 57% — in Bayantel. 

In a disclosure to the Philippine Stock Exchange on Tuesday, September 3, Globe said that the rehabilitation court approved the debt restructuring and the new Master Restructuring Agreement proposed by Globe and Bayantel.

Globe and the Lopez Group had asked the rehabilitation court for Bayantel’s $423.3 million debt to be restructured to prevent the Lopez-controlled firm from defaulting on its debt.

READ: Ayala, Lopez groups want Bayantel’s debt restructured

“The resolution granted the joint motion filed by Globe and Bayantel to amend Bayantel’s current debt restructuring plan and implement a new Master Restructuring Agreement for all of Bayantel’s creditors,” wrote Globe’s head of legal service Marisalve Ciocson-Co.

She added that Globe would acquire 56.6% stake in Bayantel by converting 69% of Bayantel’s total debt.

“As the largest creditor of Bayantel, Globe intends to convert its debt holdings into 38.3 percent of Bayantel’s equity initially and subsequently convert further amounts of Globe’s debt holdings when relevant regulatory and corporate approvals are obtained,” she added.

In turn, Bayantel’s outstanding principal debt would be reduced by 69% to $131.3 million from $423.3 million.

Ciocson-So added that “the amendments also facilitate the entry of Globe into Bayantel as a shareholder and are expected to assure Bayantel’s successful rehabilitation.”

The debt-to-equity conversion will also be applicable to all Bayantel creditors.

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 National Telecommunications Commission (NTC) and the Pasig Regional Trial Court earlier approved Globe’s application for the joint use by Globe and Bayantel of Bayantel’s frequencies

In May, Globe and Bayantel’s sister firm ABS-CBN Corp. announced a partnership that will soon allow the country’s largest media and entertainment conglomerate to deliver ABS-CBN content and offer traditional telecoms services on mobile devices

Rafael Aguado, chief operating officer of Bayantel, said that the company sees the debt-to-equity deal as a positive development that will boost their operations and long-term continuity and stability in the telco business.

The entry of Globe into Bayantel could help further maximize the potential of the latter’s key business assets, including corporate data and broadband, through synergy opportunities between the two firms, Aguado added.

Bayantel’s revenue rose 5% to P2.88 billion, and EBITDA was at P975 million in the first half of 2013. Corporate data and DSL were the key drivers of revenue growth at 16%. –

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