Globe, Bayantel move to restructure cash-strapped telco's $423.3-M debt

Globe Telecom Inc. on Thursday said it has filed a joint motion with Bayan Telecommunications Inc. (Bayantel) to restructure $423.3 million worth of Bayantel debt to keep the cash-strapped telco from defaulting on its obligations.

 

“Globe currently holds approximately 96.5% of the total financial indebtedness of Bayantel. The joint motion is intended to achieve a successful rehabilitation of Bayantel at the earliest possible date, Ayala-led Globe noted in an e-mailed statement.

 

The current outstanding principal amount of Bayantel’s debt would be reduced to $131.3 million once a debt-to-equity transaction with the Lopez Holdings Corp. is in place, Globe and Bayantel also noted in a separate disclosure to the Philippine Stock Exchange. As part of the Bayantel restructuring, Globe would convert up to 69 percent of the current outstanding debt into Bayantel shares.

 

“Bayantel's operations have not generated sufficient revenue to continue making the debt payments under its existing rehabilitation plan,” Enrique Quiason, Lopez Holdings corporate secretary, said in the statement. 

 

“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 added.

 

The restructuring of Bayantel paves the way for Globe to strengthen the collaboration with Bayantel in terms of local exchange networks, corporate data and broadband business, said Marisalve Ciocson-Co, Globe compliance officer. 

 

“Ensuring that Bayantel remains a going concern would allow both companies to become more competitive in the current industry environment,” Ciocson-Co noted.

 

“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.

 

Globe and Lopez-owned ABS-CBN Corp. early this week announced a network sharing deal which clears the way for the listed broadcast company to emter the highly competitive telecommunications industry dominated by Globe and Philippine Long Distance Telephone Co.’s Smart Communications Inc. — VS, GMA News