Globe offers to buy Bayan's debt

by Kathleen A. Martin,

Posted at Nov 06 2012 10:49 AM | Updated as of Nov 07 2012 05:10 PM

MANILA, Philippines (2ND UPDATE) - Ayala-led Globe Telecom, Inc. on Tuesday said it offered to buy the debts of Bayan Telecommunications, Inc. (Bayan), as the former also eyes an equity interest in the Lopez-led firm.

"Globe ... has obtained internal approvals to commence offers to purchase on November 5, 2012, up to 100% of the financial obligations of [Bayan] ... and Radio Communications of the Philippines, Inc. to their respective financial creditors," the company said in a disclosure.

The transaction covers Bayan's previously issued notes and other financial loans, as well as RCPI's financial obligations.

Globe said that once the debt offers are completed, it intends to amend the terms of the rehabilitation plans for Bayan and RCPI.  The said firms have been in rehabilitation since 2003 and are expected to remain in such state until 2023.

The amendments to the terms will be done "in the interest of assuring [Bayan's] long-term sustainability," Globe said.

Moreover, Globe said it is also in discussions with Bayan for a possible acquisition of an equity stake in the latter.

"Globe 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 [Bayan]," the Ayala telco said.

Bayan is seen to benefit from Globe's move to acquire its outstanding debt, 


"The tender offer is representative of Globe's belief in the value of (Bayan) as a nationally enfranchised entity... Potentially combining Globe's assets and capabilities with BTI through collaborative business efforts will enable both companies to become more competitive and help accelerate the completion of Bayan's rehabilitation," said Globe chief financial officer Albert de Larrazabal.


Bayan recently entered into a co-use agreement with Globe, which was approved by the National Telecommunications Commission. Under the deal, Globe and Bayan can jointly use the latter's 1800 megahertz frequency band. 

Bayan, which is under rehabilitation, had previously received buyout offers from Philippine Long Distance Telephone Co. (PLDT) and Globe but discussions did not prosper.

Creditors of Bayan, whose debt reportedly reached $325 million before it was placed under rehabilitation, include Development Bank of the Philippines, the United Coconut Planters Bank, and the Land Bank of the Philippines.

Bondholders of the Lopez firm, meanwhile, include Avenue Asia Investments LP, Avenue Asia International, Ltd., Avenue Asia Special Situations Fund II LP, Avenue Asia Capital Partners LP, and Van Eck Global Opportunity Masterfund Ltd.

Bayan has a fixed-line and data business segments, offered to clients located in Metro Manila and select provinces.

The firm also has a 92% control of the National Digital Transmission Network, which consists of submarine and land cables, and microwave radio worth about $70 million. is the news website of ABS-CBN Corp., which is part of the Lopez group.