Sky, Home Cable set to sign debt restructuring agreement

After a long wait and with new money in sight, Sky Cable and Home Cable are expected to sign by the end of the month a debt restructuring agreement with their creditors involving about P2.5 billion in combined debts.

Highly placed cable industry sources told The STAR that once the agreement is signed, ABS-CBN Broadcasting Corp. will invest $30 million in Beyond Cable, the holding company formed following the operational merger of the country’s two largest cable companies.

Lopez-owned ABS-CBN earlier signed with four banks for a $120- million loan to refinance existing debt and expand its cable TV business. It signed the loan deal with ABN Amro Bank NV, BPI Capital Corp., ING Bank NV, and Societe Generale Asia Ltd.

About $90 million will be used to refinance existing loans of ABS-CBN amounting to about $87 million, while the remaining $30 million will be lent out to Beyond Cable initially and convertible to equity later. On the one hand, Beyond Cable will use the money to partly pay Sky and Home creditors for past due interest and partly for new cable equipment.

The $30 million represents the capital needed by Sky Vision (the Lopez company that owns Sky Cable) in the next two years, of which $5 million will be used to update loan payments and $25 million will be for the acquisition of set-up boxes. Set-up boxes will be used by the cable operator to curb the rampant piracy of its cable signal.

In addition to the debt restructuring talks, officials of Sky and Home are currently finalizing the transfer of Home’s assets to Sky. Sources told The STAR that Sky will be paying Home in terms of shares in Sky although both companies have yet to arrive at a consensus on the valuation of the assets and the shares. Home’s assets include shareholdings in several smaller companies and the transfer of all its assets to Sky will leave the former a shell company.

As envisioned, both the Lopez and PLDT groups will have shares in Sky Cable (66.67 and 33.33 percent respectively) which will in turn own Home. The two groups’ shares in Sky, on the one hand, will be held by Beyond Cable (the holding firm for Sky and Home).

The new ownership/equity structure will, however, be implemented only after the signing of the debt restructuring agreement and the transfer of assets from Home to Sky.

The consolidation of the country’s two largest cable television companies, which account for 70 to 80 percent of the market, will be subject to the necessary government regulary body approvals, including that by the National Telecommunications Commission (NTC).