BayanTel expects to pay P600M in interest this year

Lopez-owned Bayan Telecommunications expects to pay around P600 million in interests this year even as the Pasig Regional Trial Court approved the term sheet submitted by the court-appointed receiver that will implement the company rehabilitation and debt restructuring plan.

Bayantel chief finance officer Salvador Tirona disclosed that the company will start paying this year a small portion of the principal debt, roughly around one percent. The repayment schedule is based on cash flow capacity, he said.

In 2004, the company posted an EBITDA (earnings before interests, taxes, depreciation and amortization) level of P2.14 billion, or 51 percent more than the previous year. During the first quarter of 2005, EBITDA level increased 15 percent compared to the same period in 2004. It projects the level to reach between P2.2 and P2.6 billion for the whole year.

The Pasig RTC earlier placed Bayantel under receivership mid-2003, thus allowing a moratorium on the servicing of debts amounting to $477 million. The petition for corporate rehabilitation was filed by the Bank of New York, which acted on instructions of unsecured bondholders Avenue Asia Investments L.P., Avenue Asia International Ltd., Avenue Asia Special Situations Fund II L.P., Avenue Asia Capital Partners L.P., and Van Eck Global Opportunity Masterfund Ltd.

Tirona disclosed that Bayantel started paying interest of around P135 million beginning September 2004. It paid the same amount last end-March 2005.

He likewise disclosed that the court has approved the implementing term sheet submitted by the receiver, which as far as the commercial terms are concerned (including repayment schedule) are basically in accordance with what Bayantel has proposed.

"There are just some administrative matters that need to be clarified by the receiver. There is also a proposal to create a three-man monitoring committee from the creditors that will make sure that Bayantel is complying with the terms of the rehabilitation plan," Tirona said.

An appeal has been filed by the some of the creditors with the Court of Appeals against certain terms of the restructuring plan, specifically for a pari-passu treatment among both secured and unsecured creditors.

Tirona earlier said: "We recognize the right of our creditors to question certain terms of the RTC’s ruling on BayanTel’s rehabilitation plan and we really hope for a speedy resolution on the matter by the Court of Appeals so we can move forward and focus on sustaining the momentum of our business."

Tirona clarified that while the bondholders have cited specific issues on the RTC ruling in their appeal, the viability of BayanTel’s business and its capability to pay off its debts was not in question. Around $200 million are owed to bond holders and $277 million to banks.

Last Sept. 30, 2004, BayanTel remitted to the creditors the first payment of about P134 million, with another payment expected this December.

According to Tirona, the appeals filed by the creditors is just part of the debt restructuring process and is not unique to BayanTel’s case, given the number of parties involved with different perspectives on how to best implement a rehabilitation plan for the company.

"On our part, we remain committed to adopt a rehabilitation plan that allows us to achieve sustainable growth and profitability while continuing to provide excellent service to all our customers," he said.