Piltel now debt-free

After many years of being saddled with huge debts, cellular company Pilipino Telephone Inc. (Piltel) has made its final prepayment of around $235 million last Dec. 4, making the company completely debt free.

Of the amount, around $161 million was owed to parent company Smart Communications and the remainder to third parties. The $235 million represents the balance of Piltel’s total outstanding restructured debt after the initial payment of $176 million was made on June 5, 2006.

With this development, company officials said they are now reviewing the possibility of Piltel starting to pay dividends to Smart Communications.

But Philippine Long Distance Telephone Co. (PLDT) chairman Manuel Pangilinan explained that Piltel will first have to address its capital deficiency amounting to around P23 billion. "This will entail a capital reorganization of Piltel probably in the first half of next year to wipe out this deficit which normally would take two to three years to address," he said.

Pangilinan added that once the capital account becomes positive, Piltel can probably start declaring dividends, probably by the second half of 2007.

Specifically, the debts that were prepaid consists of $106.2 million, P2.69 billion, and Y8.66 billion, which at the exchange rate on payment rate totaled around $235.1 million.

Piltel’s reported net income rose from P6.9 billion during the January to September period last year to P8.5 billion this year up 22 percent.

Its core earnings, as adjusted for the additional debt discount booked on prepaid debts and the effects of foreign exchange revaluation and certain deferred tax assets, grew 16 percent to P5.1 billion in the first nine months of 2006 compared with P4.4 billion for the same period in 2005.

Earnings before interests, taxes, depreciation and amortization (EBITDA) rose 25 percent from P6.4 billion to P7.9 billion.

Last Oct. 25, Piltel submitted notices of its intent to make the final voluntary prepayment of its principal debt. The aggregate prepayment amount of $232.6 million represents the balance of Piltel’s total outstanding restructured debt.

Piltel president and chief executive officer Napoleon Nazareno said the company has taken yet another giant step forward with the plan to prepay its remaining restructured debt by yearend.