Capwire officials said they might resort to a court settlement if the banks continue to sit on the company’s proposals, which the officials said are needed in light of the changing business environment in the telecommunications industry.
The banks are also lukewarm to a proposed revised business plan submitted by Capwire that will call for a revision in the principal debt repayment schedule – in particular, longer grace period for the principal and reduced interest payments for the first two to three years.
They are demanding that Capwire pay according to the schedule of the original restructuring agreement before they review the proposed business plan. However, company officials said their cash flow is insufficient and the company could only make partial remittances to the creditors.
Land Bank of the Philippines, which has an unsecured exposure to the company of P391.5 million has filed a motion to compel Capwire to comply with the agreement. BPI-Far East Bank and Trust Co., which was not a signatory to the original agreement, has joined LBP in its motion.
LBP president Margarito Teves said the bank cannot commit to Capwire’s request for revisions in the court-approved loan restructuring agreement unless Capwire complies with the conditions precedent outlined in the agreement.
In response to Land Bank’s letter, Capwire said it was remitting P10 million as interest payment and registered additional collaterals. Despite this, LBP filed a case against Capwire, to which the company filed an opposition last June 21.
Capwire owes seven banks –namely LBP, the Development Bank of the Philippines, Philippine National Bank, Urban Bank/PDIC, United Overseas Bank, BPI/FEBTC and Manulife Phils. – a total of P938.7 billion in principal obligations. Of the seven, only DBP is a secured creditor for its exposure amounting to P189.7 billion.
The total debt is broken down as follows: Land Bank, P391.5 million; PNB, P153.4 million; Urban Bank, P133 million; UOB Phils., P23.76 million; BPI-Far East, P11.66 million; and Manulife, P35.6 million.
Of the P158 million in interest payment obligations of Capwire amounting to P158 million, it has so far paid P38 million.
Capwire executive vice president and chief executive officer Maureen Santiago said that they were supposed to pay another P10 million in interest payments, but were surprised to learn that nobody among the creditor banks wanted to be an agent bank. "To reject it is very surprising considering that it is fee-based," she said.