MANILA, Philippines - Trans Digital Excel, the creditor-turned-shareholder of Express Telecommunications Co. has dispelled the possibility of a hostile takeover of Extelcom, even as it refuted Bayan Telecommunications’ claim of an illegal dilution of the Lopez Group’s Marifil Holdings Corp.’s shares in Extelcom.
San Miguel Corp. (SMC) is in the final stages of discussions with Trans Digital for the acquisition of Extelcom, a move that will allow SMC to enter the cellular mobile telephone service business.
Plaridel Bohol II, retained counsel for Trans Digital, said the present ownership of Extelcom resulted from the decision of the Regional Trial Court (RTC) of Manila approving the rehabilitation plan for the company. The decision was recently upheld by the Court of Appeals (CA).
Bohol said Trans Digital is not a “vulture fund” but a creditor which filed the petition for the corporate rehabilitation of Extelcom, the country’s first cellular mobile telephone services carrier.
“The court-approved rehabilitation plan successfully restructured Extelcom’s outstanding debt of P9 billion and has allowed the company to position itself for an impending re-launch and the resumption of full operations,” Bohol said.
He explained that a shareholder can lose its majority status when it fails or refuses to shoulder its portion of the company’s debt. In the case of Extelcom, the rehabilitation court accepted a scheme that would redound to the benefit of both shareholders and creditors. He said the Securities and Exchange Commission and the courts have done their duty to safeguard the rights of all Extelcom shareholders.
With the successful implementation of the rehabilitation, all the previous shareholders do not have to settle Extelcom’s liabilities to the proportional extent of their holdings in the company.
On the other hand, Bohol said Bayantel was not opposed to the rehab plan itself since it submitted its own “alternative rehabilitation plan.”
“Nonetheless, this proposal was rejected since it would only allow it to feed on Extelcom by using and exploiting Extelcom’s assigned frequencies for Bayantel’s sole benefit while leaving Extelcom in its previous moribund, vegetative state. Who is the vulture here?” Bohol asked.
He also noted that Bayantel is a direct competitor, since it owns a similar CMTS license despite being a significant minority in the company previously. “It is only natural and to be expected that its interest would run contrary to that of Extelcom,” Bohol said.
However, Bayantel has so far been completely unable to roll out any kind of CMTS network despite having been granted authority by the regulators several years ago, he added.
He noted that Bayantel is itself under corporate rehabilitation and will not become debt-free and will not be able to exit from rehabilitation until the year 2023, assuming everything proceeds smoothly and exactly according to their rehabilitation plan.
“It is therefore not in any position to dictate what is best for Extelcom,” Bohol said.