Globe makes tender offer for 92% of Bayan noteholders

MANILA, Philippines - Globe Telecom Inc., a joint venture between diversified conglomerate Ayala Corp. and Singapore Telecommunications Inc., has acquired close to 92 percent of the total remaining outstanding debt of Lopez-controlled Bayan Telecommunications Inc.

In a statement, Globe said approximately 91.6 percent of the aggregate remaining principal amount of the notes worth $184.5 million appears to have been tendered and not withdrawn as of Nov. 27.

The telco launched Nov. 6 a tender offer for the outstanding notes and bonds of Bayan and Radio Communications of the Philippines Inc. (RCPI).

Globe announced anew that it has extended the early tender date of the offer to purchase for cash any and all of the 13.5 percent senior notes originally due 2006 issued by Bayan to Dec. 18, instead of the first extension of Nov. 27.

Accordingly, all holders who validly tender their notes on or prior to the extended early tender date and whose notes are accepted for purchase would receive the total consideration equivalent to an amount in cash equal to the total consideration for the applicable acceptance level minus $2.50 for each $1,000 remaining principal amount of notes.

Last Nov. 6, Globe assistant corporate secretary Marisalve Ciocson-Co told the Philippine Stock Exchange that the company has started separate discussions with the controlling shareholders of Bayan regarding a wide range of commercial arrangements, including a potential acquisition by Globe of an equity interest in the cash-strapped company.

Globe chief financial officer Albert de Larrazabal earlier said in a statement that the company would become the major creditor of Bayan and will perform the roles of Bayan’s creditors in respect to the rehabilitation plan.

“Potentially combining Globe’s assets and capabilities with (Bayan) through collaborative business efforts will enable both companies to become more competitive and will help accelerate the completion of Bayan’s rehabilitation,” Larrazabal said.

Globe and Bayan already share radio frequencies to ease congestion problems, particularly that being experienced by cellular subscribers of Globe. The set-up was approved by the National Telecommunications Commission (NTC).

As early as August, Lopez Holdings Corp. president Salvador G. Tirona confirmed that the Lopez Group remains open to selling its telecommunications business that has been under rehabilitation since July 2004 after its debt swelled to $325 million.

Bayan has reportedly settled a total of P8.19 billion in total debt since it filed for corporate rehabilitation in 2004. In the first nine months of the year, the company paid P908.3 million worth of debt.

The debt-ridden telco provider had been subject to court-supervised rehabilitation proceedings since 2003 and intends to pay its $325-million outstanding debt within 2023.

The bondholders of Bayan included Avenue Asia Investments LP., Avenue Asia International, Ltd., Avenue Asia Special Situations Fund II, L.P., Avenue Asia Capital Partners, L.P., and Van Eck Global Opportunity Masterfund Ltd.  Domestic creditors include the Development Bank of the Philippines, United Coconut Planters Bank and Land Bank of the Philippines.