Saying Bayan Telecommunications is in dire financial standing, Ayala-led operator Globe said in a disclosure on Thursday, May 30, that it has filed a court petition seeking to significantly restructure the debt of the Lopez-owned telco.
Globe filed the petition, together with Bayan, in the rehabilitation court, asking for the reformation of Bayantel’s financial debt in order to prevent the recurrence of default and ensure Bayan’s continued viability.
Following Globe’s tender offers for the Bayant debt in 2012, Globe currently holds approximately 96.5 percent of the total financial indebtedness of the Lopez firm.
The joint motion is intended to achieve a successful rehabilitation of Bayant at the earliest possible date, the disclosure said.
The current outstanding principal amount of this debt is approximately the equivalent of $423.3 million. Bayan’s operations have not generated sufficient revenue to continue making the debt payments under its existing rehabilitation plan, said Globe.
?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,? it said.
The restructuring would, upon confirmation by the court, significantly decrease this through a conversion of up to 69 percent of the debt into Bayan shares, the disclosure added.
As restructured, the outstanding principal debt balance would be reduced to approximately $131.3 million, assuming the debt to equity conversions occur to their fullest extent, Globe further said.
The restructuring, including the debt to equity conversion feature, would apply to all of Bayantel?s creditors equally upon receipt of certain regulatory approvals, including the confirmation of the court, it added.
?By acquiring the Bayantel debt, Globe sought to enable Bayan’s continued viability as a telecommunications provider. For Globe’s part, 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 disclosure said.
Ensuring that Bayantel remains a going concern would allow both companies to become more competitive in the current industry environment, it added.
?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,? the disclosure said.