Piltel debt restructuring to be delayed

The signing of the debt restructuring agreement between cash-strapped Pilipino Telephone Corp. (Piltel) and the creditor banks may be delayed by a month due to some legal procedures which have to be followed, according to Napoleon Nazareno, Piltel president and chief executive officer.

Without going into details, Nazareno said the banks are still working for the approval of the credit proposal which is likely to happen "sometime in June." The signing was supposed to have been done last week.

"There is nothing to worry. It's just that things have to be ironed out but definitely there will be one (signing)," he said.

He pointed out that there are no changes expected on the terms of the deal with the banks embodied under a memorandum of understanding (MOU) entered into by the parties on Oct. 8 last year.

As of end of 1999, Piltel has a total obligation of approximately P34 billion, including peso and US dollar-denominated bank debts amounting to P7.7 billion and $133.7 million (P5.4 billion), respectively; convertible bonds with face value of $183 million and accrued put premium of $46.6 million, aggregating to P9.3 billion; and a contingent liability with Marubeni Corp. of Japan of $279 million (P11.2 billion).

Nazareno said they are currently holding separate talks with Marubeni and are finalizing documentation for the convertible bondholders.

The implementation of the agreement with the banks assumes that the total debt restructuring program, which includes the bondholders and Marubeni, is in place since it involves issuance of convertible shares, he explained.

Piltel has incurred significant losses since 1997 which affected its ability to service its maturing obligations on a timely basis.

The MOU provides that half of the bank debt will be replaced by peso-denominated convertible preferred stock exchangeable into similar stocks in Piltel's mother company, the Philippine Long Distance Telephone Co. (PLDT).