PLDT offers $350-M notes

Telecommunications leader Philippine Long Distance Telephone Co. (PLDT) is offering $350-million worth of 10-year fixed rate notes due 2012 and five-year fixed rate notes due 2007, net proceeds of which will be used to repay the company’s maturing loan obligations now until 2004.

This as The STAR learned that PLDT is now negotiating with a number of potential lenders, including another German Bank, for new loans. This will on top of the KFW loan amounting to $149 million which it was able to secure earlier as well as an expected $80-million loan from the Japan Bank for International Cooperation (JBIC).

At the same time, PLDT is initiating cash tender offers to purchase its outstanding 8.5 percent notes due 2003 and 10.625 percent notes due 2004. Credit Suisse First Boston Corp. and Morgan Stanley & Co. have been tapped by the telecom firm as dealer managers for the offers.

PLDT president and chief executive officer Manuel V. Pangilinan is expected to leave for the United States next week to start the roadshow presentation for the notes offering.

The price for validly tendered notes will be determined based on a spread of 350 basis points over a reference US Treasury security in the case of the notes due 2003 and a spread of 385 basis points in the case of notes due 2004.

Minimum price for each $1,000 principal amount of validly tendered notes due 2003 is $1,015 while that for notes due 2004 is $1,050. PLDT said the offer will expire at 5 p.m. New York time on May 15 unless terminated earlier or extended.

The company was supposed to undertake the notes offering late last year but this was deferred due to the devastating effects of the Sept. 11 terrorist attacks on the United States on the international financial climate.

PLDT hopes to raise around $1.3 billion to pay for its maturing loan obligations between 2002 and 2004 from various sources, including the notes offering, new loans to repay existing ones, and sale of part of its stake in wireless subsidiary Smart Communications, Inc.

The telecom firm was able to tap earlier a $149-million loan from the German financing agency-KfW. It also expects to secure approval in the next few weeks for an $80-million loan from IBC.

Meanwhile, talks are still ongoing with the American Insurance Group (AIG) for the sale of a five-to 10-percent stake in Smart.

According to Pangilinan, they hope to raise half of the $1.3 billion, or around $650 million, from internally generated funds, including dividends from its investment in Smart, and the balance from loans or equity sale.