Globe confirms talks with Bayan creditors

MANILA, Philippines - Globe Telecom Inc., a joint venture between diversified conglomerate Ayala Corp. and Singapore Telecom, is in discussions with bank creditors to acquire Lopez-controlled Bayan Telecommunications Inc. (Bayan).

Albert de Larrazabal, chief financial officer of Globe, informed the Philippine Stock Exchange (PSE) that the company has met with some creditors of Bayan that is currently under corporate rehabilitation.

“We wish to confirm that Globe has met with some creditors of Bayan in relation to our ongoing exploratory discussions with Bayan that will enable both companies to become more competitive in the current business environment,” he stressed.

He pointed out that no final agreement has been reached yet with the creditors or Bayan that was placed under rehabilitation in July 2004.

“We will make the appropriate disclosures when discussions reach a definitive stage,” he added.

The bondholders of Bayan included 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.

Domestic creditors, on the other hand, include the Development Bank of the Philippines, the United Coconut Planters Bank, and the Land Bank of the Philippines.

While Bayan is under rehabilitation wherein it hopes to wipe out its debt buy 2023, it entered into a co-use agreement with Globe that was approved by the state regulator National Telecommunications Commission (NTC).

The agreement calls for the joint use of the Bayan’s assigned 1800 megahertz (MHz) frequency band (1750-1760 MHz; 1845-1855 MHz) allowing Globe to resolve the increasing demand for voice, short message system (SMS), and mobile-data services.

On the other hand, Bayan would be able to offer cellular phone services nationwide.

“The co-use agreement between Globe and Bayan, which was approved by NTC last Sept. 28, represents a commercial transaction done in the ordinary course of business,” De Larrazabal explained.

BayanTel operates a fixed-line and data business in Metro Manila and in some of the country’s provinces. It also has a 92 percent control of the National Digital Transmission Network (NDTN), second largest only to Philippine Long Distance Telephone Co. (PLDT)’s network backbone.

Built in 1999, the NDTN consists of submarine, land cables, and microwaves worth about $70 million. It is currently being managed by the Telecoms Infrastructure Corp. of the Philippines (TelicPhil).

BayanTel previously received buyout offers from PLDT and Globe Telecom Inc. but talks fizzled out due to its huge debt.

De Larrazabal pointed out that the company continues to discuss possible business collaborations with different parties including the Lopez family that owns.

“Globe continues to discuss other potential forms of business collaboration with different parties, including the Lopez Group,” he said.

Last August, Lopez Holdings Corp. president Salvador G. Tirona confirmed that the Lopez group remains open to selling its telecommunications business that has been under rehabilitation since July 2004 after its debt swelled to $325 million.