Globe eyes initial 57% stake in Bayantel for $90M

MANILA, Philippines - Globe Telecom Inc., a joint venture between conglomerate Ayala Corp. and Singapore Telecommunications Ltd., is initially looking at acquiring a 58-percent stake in cash strapped Bayan Telecommunications Inc. (Bayantel) of the Lopez Group through a debt to equity transaction.

Globe chief financial officer Alberto de Larrazabal told reporters on the sidelines of the launch of a tie up with Google that the Ayala-led company is set to convert 69 percent worth of debt into a 57-percent equity in Bayantel.

De Larrazabal pointed out that the company would initially convert about 40 percent of its $130-million debt acquired last December into equity after which another 29 percent would be converted after Bayantel completes its increased in authorized capital stock.

He pointed out that Bayantel would have to undertake a capital restructuring in order to accommodate the issuance of additional shares to Globe.

According to him, the 69 percent worth of debt acquired for about $90 million would be equivalent to a 57-percent interest in Bayantel.

De Larrazabal said the company is hoping to get clarity from the regional trial court in Pasig that serves as the rehabilitation court of the cash-strapped Lopez firm.

“We are a little bit concerned. In a month we hope to get clarity. The biggest uncertainty is the court process,” he said.

Last May 30, Globe and the Lopez Group asked the rehabilitation court to restructure Bayantel’s $423.3-million debt to prevent default.

Bayantel’s outstanding debt stood at $497 million when it was placed under corporate rehabilitation in 2004. It has reportedly settled a total of P8.19 billion since it filed for supervised rehabilitation proceedings under the regional trial court in Pasig City and intends to pay its $325- million outstanding debt within 2023.

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

De Larrazabal added that discussions are ongoing for the remaining stake of the Lopezes that would likely be reduced to a little over 40 percent after the debt to equity transaction.

“We are discussing all options at this point in time. We may stop or we may expand,” he added.

By acquiring the Bayantel debt, Globe sought to enable Bayantel’s continued viability as a telecommunications provider.  Such a restructuring would allow Globe to further strengthen collaborative efforts with Bayantel in respect of their local exchange networks, corporate data and broadband businesses.

The acquisition would entail the approval from the rehabilitation court as well as the state-run National Telecommunications Commission (NTC) since it would involve the change in ownership.

The NTC has approved Globe’s application for the joint use by Globe and Bayantel of the frequencies 1750-1760MHz/1845-1855MHz assigned to Bayantel.

Earlier, Globe and the Lopez-owned multimedia giant ABS-CBN Corp. announced a network sharing agreement allowing the listed broadcast firm to become a third player in the competitive telecommunication industry beside Globe and PLDT’s Smart Communications Inc.

However, ABS-CBN chairman Eugenio Lopez III said the network sharing agreement was separate from the ongoing talks for the possible takeover of Bayantel by Globe.