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BAYAN
Telecommunications Inc. (Bayan) will likely secure this
year the consent of the remaining creditors of its
subsidiary Radio Communications Philippines Inc. (RCPI)
for an out-of-court debt settlement.
Bayan
chief financial officer Meldin Al G. Roy said the phone
company needs to get the formal consent of one more bank
before it can declare that majority of RCPI creditors
are willing to enter into an out-of-court agreement.
“We got
the consent of one bank in 2006 and two more in the
middle of this year. We are waiting for one more within
the year,” added Roy.
Three
banks have opted for an out-of-court settlement. RCPI’s
obligations with them represent close to half of its
total debt amounting to $25 million. The amount is
already included in Bayan’s $325-million obligation it
owes to its creditors.
Roy declined to name the creditors of RCPI. In an
interview in August 2006, he had identified Banco de Oro
and
East
Asia Avenue as among RCPI’s creditors.
The
debt-restructuring program for RCPI will be patterned
after BayanTel’s, in which its $325-million obligations
will be paid pari passu, or at an equal pace, for a
period of 19 years, said Roy.
When the
Pasig Regional Trial Court approved Bayan’s 19-year debt
restructuring program in June 2004, the court said the
debts of RCPI had to be dealt with separately. This
meant that Bayan should enter into an out-of-court
agreement with RCPI creditors.
Under
Bayan’s present debt-restructuring program, it pays
creditors every semester for the principal payment and
every quarter for the interest payment. The phone unit
of the Lopez group expects to be debt-free by 2023.
As of
September this year, Bayan had paid P1.75 billion in
total interest and principal payment, P380.6 million.
“At the
end of the third quarter, we have already paid a total
of P2.13 billion worth of obligations, including
principal,” said Roy, adding that the company could
repay its creditors a total of P2.39 billion by the end
of the year.
The
company, a subsidiary of Benpres Holdings Corp., will
use internal funds to pay for its debts. If Bayan is
able to post a healthy performance then the company may
exit from rehab earlier than 2023, said Roy.
Bayan
had divested its interests in RCPI so it can focus on
its core businesses which are data and communications
services.
The
company still owns RCPI assets such as equipment,
buildings, lands and franchise after selling the
storefront business of RCPI such as its remittance
business to Universal Store-front Services Corp., a
newly formed company of the Lopez group.
RCPI has
been ranked the second-largest remittance business in
the country. Still, Bayan decided to give RCPI up
because it was eating up a huge amount of working
capital, at least P500 million yearly.
Bayan
chief executive consultant Tunde Fafunwa had said they
would rather use that working capital to run Bayan’s
fixed-line and data businesses.
“In
order to run a remittance center, one must have cash to
operate it. Actually, all it needs is cash to run it.
There is a huge amount of working capital involved and
yet it was not contributing to Bayan,” he said. |
