Globe makes tender offer to Bayan noteholders

MANILA, Philippines - Globe Telecom Inc., a joint venture between diversified conglomerate Ayala Corp. and Singapore Telecommunications Ltd., is a step closer to acquiring a stake in ailing Lopez-controlled Bayan Telecommunications Inc. as part of the consolidation in the country’s competitive telecom industry.

In a statement, Globe said approximately 82 percent of the aggregate remaining principal amount of the loans of Bayantel amounting to $200 million appears to have been tendered in the concurrent tender offer that was launched last Nov. 5.

Globe added that notes representing approximately 85 percent of the aggregate remaining principal amount worth $184.5 million had been tendered and not withdrawn. 

It added that approximately 64 percent of the aggregate remaining principal amount of the debt of Radio Communications of the Philippines Inc. (RCPI) appears to have been tendered.

The telco provider announced that it has extended the early tender date of the tender offer to purchase for cash any and all of the 13.5 percent senior notes originally due 2006 issued by Bayantel to Nov. 27 instead of the original deadline of Nov. 19.

Accordingly, all holders who validly tender their notes on or prior to the extended early tender date and whose notes are accepted for purchase would receive the total consideration equivalent to an amount in cash equal to the total consideration for the applicable acceptance level minus $2.50 for each $1,000 remaining principal amount of notes

Last Nov. 6, Globe assistant corporate secretary Marisalve Ciocson-Co told the Philippine Stock Exchange (PSE) that the company has commenced separate discussions with the controlling shareholders of Bayan regarding a wide range of commercial arrangements including a potential acquisition by Globe of an equity interest in the cash-strapped company.

“The parties remain in discussions on the terms of the commercial arrangements including the price and other conditions under which the acquisition may be effected,” she stressed.

Once the offer is completed, Globe’s chief financial officer Albert de Larrazabal earlier said in a statement that the company would become the major creditor of Bayantel and will perform the roles of Bayantel’s creditors in respect to the rehabilitation plan.

“Potentially combining Globe’s assets and capabilities with (Bayantel) through collaborative business efforts will enable both companies to become more competitive and will help accelerate the completion of Bayantel’s rehabilitation,” Larrazabal said.

Globe said it has been in talks with debt-ridden Bayantel “that will enable both companies to become more competitive in the current business environment.”

Globe and Bayantel already share radio frequencies to ease congestion problems, particularly that being experienced by cellular subscribers of Globe. The set up was approved by the National Telecommunications Commission (NTC).

As early as 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.

Bayan has reportedly settled a total of P8.19 billion in total debt since it filed for corporate rehabilitation in 2004. In the first nine months of the year, the company paid P908.3 million worth of debt.