In a letter to the Philippine Stock Exchange, BHC corporate information officer Alexis Paul Dimarucot said the holding firm was not able to make its interest payment last Sept. 17 on the remaining long-term commercial papers (LTCPs) maturing in 2003.
"As earlier announced, BHC has appointed Credit Suisse First Boston as its financial adviser in connection with its Balance Sheet Management Plan. BHC has proposed to make interest payments and principal repayments to its creditors in accordance with the Plan," Dimarucot said.
BHC earlier defaulted on interest payments for the LTCPs last June 17; on its 7.875 percent Euronotes due last June 19, and another scheduled interest payment amounting to P19.606 million for the same LTCPs last July 1.
BHC issued P3 billion worth of LTCPs in August 1996 to finance its investments in real property development, telecommunications, infrastructure projects and power-related projects of its subsidiaries and affiliates.
The LTCPs were offered and issued in two series the first tranche of P1 billion of which was fully paid last year. Under the terms, the next P2 billion will be repaid in one lump sum on Oct. 1, 2003 with interest at 1-1/8 percent above the 91-day Treasury bill rate, payable in quarterly arrears.
As of end-2001, BHC had P2 billion in outstanding LTCPs and the equivalent of P7.754-billion worth of five-year Euronotes, issued in 1997 and listed at the Luxembourg Stock Exchange.
BHC is saddled with nearly $597 million (approximately P31 billion) in total debts, about a third or over $200 million of which are falling due this year.
Under its Balance Sheet Management Plan, the company will seek the consent of its creditors for the restructuring of all liabilities, 86 percent of which are dollar-denominated, as the company explores various options to address its debt problems.
These options include the divestment of its non-core assets and a freeze on new investments and capital calls on its infrastructure projects.
Further weighing down on BHC’s debt woes is the similar predicament of its flagship subsidiary, ABS-CBN Broadcasting Corp., which defaulted on the payment of about $6 million of its short-term loans to two creditor banks last Aug. 30.
However, ABS-CBN was able to secure a P3-billion exchangeable notes facility with a majority of its short-term creditors to refinance its current loans, adding that it estimates at least 88 percent of its total short-term loans will be covered by the facility as it expects more creditors to take part in the loan restructuring.