Highly placed sources from the Lopez group said that the acquisition by ABS-CBN of Sky Cable makes more sense because of the synergy between the two businesses. No decision has yet been reached as to how ABS-CBN will compensate Benpres for the purchase, but one option is a share-swap arrangement, a Lopez group official told The STAR.
Publicly listed ABS-CBN, the largest integrated media and entertainment company in the country, is owned 57 percent by Benpres. From January to March of this year, ABS-CBN posted gross airtime and other broadcasting-related revenues amounting to P2.4 billion. Net sales and services reached P1.025 billion
SkyCable and PLDT-Home Cable have just signed a debt restructuring agreement with its creditors involving about P2.5 billion in combined debts after ABS-CBN invested $30 million in Beyond Cable, the holding company formed following the operational merger of the country’s two largest cable companies.
ABS-CBN chairman Eugenio Lopez III earlier told The STAR that the $30 million extended to Beyond Cable initially in the form of a loan, will be converted into equity after two years. However, PLDT has an option to give $10 million so as not to dilute its stake. Right now, the Lopezes control 66.67 percent of Beyond Cable while PLDT has the remaining 33.33 percent.
ABS-CBN’s acquisition of Benpres’ stake in Sky Cable will further solidify the broadcasting company’s interest in the country’s leading cable TV company.
The TV and radio network earlier signed a $120-million loan with four banks for a $120 million loan to refinance existing debt and expand its cable TV business. It signed the loan deal with ABN Amro Bank NV, BPI Capital Corp, ING Bank NV, and Societe Generale Asia Ltd.
Benpres, which has a 62 percent stake in Sky Vision which in turn operates Sky Cable, has revealed plans to sell its stake in Sky Cable as well as in Bayan Telecommunications (BayanTel) and other units as the Lopez-owned holding company tries to trim down its huge debt burden.
The holding firm’s total debt consists of $193 million in direct obligations, $210 million in BayanTel-related debt and $145 million in Maynilad-related debt.
Benpres president and CEO Angel Ong earlier said the firm will have to sell more assets to accelerate reduction of its debt. A group official said in an interview that Benpres will sell its stake in Bayan Telecommunications (BayanTel) once there is a good offer. Bayantel has just restructured its debts.
Aside from Benpres’ stakes in Sky Cable and BayanTel, also on the block are the firm’s 24.5 percent equity in Rockwell Land Corp. although there have been no takers for the last three years. However, Ong noted that Rockwell has been able to sell its high-end residential project, the Manansala, and has, thus, been able to substantially reduce debt in the last two years.
Benpres also plans to give up control of another subsidiary Maynilad Water Services Inc. in a bid to reduce outstanding debt from $548 million to $403 million.
It has also identified the sale of 20 percent to 30 percent shares in the Manila North Tollways Corp. for $20 million to $30 million as the speediest and most likely asset sale to be achieved.
Ong earlier disclosed that Benpres may book a net profit this year, after a net loss of P1.9 billion in 2003, due to the strong showing of units ABS-CBN and First Philippine Holdings Corp. The two subsidiaries are set to give out cash dividends in the second half, their first in many years.
Ong added that Benpres will have no major provisioning to book this year, after making full provision for its $80 million equity in Maynilad in 2003. The holding firm expects to finalize a debt restructuring deal with Maynilad creditors by the end of the year.
As of end-2003, Benpres had a retained earnings deficit of P8.2 billion. But, Ong said cash dividends from ABS-CBN and First Philippine Holdings should be able to cover interest payments.