Bayantel takeover a boon to consumers, says Globe
Lawrence Agcaoili (The Philippine Star) - December 23, 2013 - 12:00am

MANILA, Philippines - Ayala-led Globe Telecom Inc. said the proposed takeover and rehabilitation of cash-strapped Bayan Telecommunications Inc. encourages competition in the telecommunications industry and is expected to benefit the consumers.

Atty. Froilan Castelo, general legal counsel of Globe, said the master restructuring agreement (MRA) between Globe and Bayantel as approved by the Pasig City regional trial court is “pro-competition, pro-consumer and pro-fair trade.”

“The impending rehabilitation of Bayantel, a subsidiary of listed Lopez Holdings Inc., will create a vibrantly competitive atmosphere in the telecommunications industry that would augur well for customers,” Castelo stressed.

He pointed out that the MRA is based on a broad sectoral recognition of the need for Bayantel’s rehab starting with its major creditors like Goldman Sachs Group, Clearwater Capital Partners, Avenue Capital, and the UK based Spinnaker Capital.

Castelo also cited the concurrence of the Solicitor General and the approval last year by the National Telecommunications Commission (NTC) of the court-mandated joint use of Bayantel’s frequecies.

“Bayantel’s rehabilitation plan provides the kind of judicial activism that courts have been empowered with, thanks to the Supreme Court Rules on Corporate Rehabilitation, which permits innovation,” he added.

In the case of the Bayantel plan, Castelo said the courts allowed Globe to participate by assuming Bayantel’s debts. With the entry of Globe, Bayantel’s rehabilitation time frame has been shortened by 10 years.

“This also makes Bayantel’s rehabilitation the first successful judicial rehabilitation plan in the country. In a rehabilitation plan, a corporation experiencing financial distress can file for relief from the courts and suspension of the payment of its debts while it is being nurtured back to good financial health,” he explained.

Under the transaction, Globe would acquire a 56.6 percent stake in Bayantel through the conversion of 69 percent of Bayantel’s total debt. In return, the outstanding principal debt of Bayantel would be reduced by 69 percent to $131.3 million from $423.3 million.

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.

Bayantel has reportedly settled a total of P8.19 billion since it filed for supervised rehabilitation proceedings under the regional trial court in Pasig City. It intends to pay its $325 million outstanding debt within 2023.

According to Castelo, the key in a rehabilitation is that a company should be allowed to recover its financial health so that its employees and stakeholders would not be affected. Bayantel was weighed down by its foreign debts, incurred when the peso was still half its exchange rate.

Likewise, the court-approved rehabilitation of Bayantel would also allow the company to fulfill its critical role as a key service provider in Eastern Visayas battered by Super Typhoon Yolanda last Nov. 8.

Eastern Visayas has long been a focus of Bayantel for fixed line services and Globe Telecom’s participation in the firm’s rehabilitation will ensure that it continues to deliver on its commitments to its customers.

AVENUE CAPITAL BAYAN TELECOMMUNICATIONS INC BAYANTEL CASTELO CLEARWATER CAPITAL PARTNERS CORPORATE REHABILITATION EASTERN VISAYAS GLOBE PASIG CITY REHABILITATION
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