ABS-CBN, creditors in talks over P27 billion outstanding loans

MANILA, Philippines — Creditor banks have engaged in talks with Lopez-led ABS-CBN Corp. over its outstanding P27.04 billion obligations after the House of Representative denied the renewal of the media giant’s.

Edwin Bautista, president and chief executive officer of Aboitiz-led Union Bank of the Philippines, told The STAR the Aboitiz-led bank is confident ABS-CBN would be able to continue servicing its financial obligations.

“ABS-CBN is not in arrears in its loan payments to UnionBank. They have also publicly disclosed that they will continue paying their financial liabilities according to their repayment schedules,” Bautista said in a text message.

Bautista pointed out that ABS-CBN has been a customer of the bank for many years and its robust financial condition is recognized.

“We anticipate that ABS-CBN will rationalize its operations and downsize with the non-renewal of the franchise. Nonetheless, we recognize that ABS-CBN’s other businesses, such as global, film syndication and distribution, and its preeminent position as a strong and reliable content creator are unaffected by the non-renewal,” he said.

Based on its latest financial statement, the outstanding term loans of ABS-CBN stood at P27.04 billion as of end-September last year. UnionBank has the biggest share with P11.35 billion, followed by Ayala-led Bank of the Philippine Islands (BPI) with P10 billion.

ABS-CBN obtained a 10-year loan term agreement worth P5 billion in May last year and another P4.75 billion syndicated loan agreement in March 2016 with UnionBank.

It also entered into a seven-year loan agreement with BPI worth P6 billion in March 2018.

BPI president and chief executive officer Cezar Consing said the 168-year-old bank is committed to being as supportive as possible of its clients, including ABS-CBN, through difficult times.

“We have been in very constructive discussions with ABS-CBN and, with their cooperation, will shortly enter into arrangements that will enhance the risk profile of our loan exposures to the company.  These arrangements will include cash and security arrangements,” he said.

Consing added that the bank has been informed that ABS-CBN would continue to operate in other businesses that do not require franchises such as their international licensing and distribution, digital and cable businesses.

“We appreciate ABS-CBN’s commitment to service their loan obligations according to existing payment schedules,” Consing added.

Voting 70-11, the House of Representatives rejected the renewal of the broadcasting franchise of ABS-CBN last July 10, putting in limbo the status of the  company’s 11,000 workers.

For its part, the Bankers Association of the Philippines (BAP) said member banks are expected to manage their credit portfolio in relation to the non-renewal of the ABS-CBN broadcast franchise, while the country continues to battle the impact of the coronavirus disease 2019 or COVID-19 pandemic.

“The banking industry remains strongly capitalized and in solid liquidity position to manage credit risks,” BAP said in a statement. Consing is also president of the BAP.

The group added the prudential measures instituted by the Bangko Sentral ng Pilipinas (BSP) allowed the banking industry to remain strong and healthy through the years that enabled the banks to withstand various crises.

“In the midst of today’s pandemic and concerns on the non-renewal of the ABS-CBN broadcast franchise, we strongly believe that banks will continue to be steadfast as they are supported by strong financial conditions, robust risk management systems and a good corporate governance,” it said.