PLDT presses gov't to pave way for $365-M NTT capital infusion

The Philippine Long Distance Telephone Co. urged the government yesterday to expedite the approval of its acquisition of Smart Communications Inc. in view of the huge $365 million (P14.7 billion) fresh capital that its foreign strategic partner is set to infuse.

Manuel V. Pangilinan, PLDT president and chief executive officer, pointed out that while they are about to close the deal with NTT Communications of Japan, there are still a number of regulatory consents which must be secured.

The group, he said, must obtain a favorable endorsement from the National Telecommunications Commission (NTC), approvals from the Securities and Exchange Commission, Board of Investments and Philippine Stock Exchange; and clearance from the Bureau of Internal Revenue.

"It's not everyday that investors will pour in that big amount of money which is even in dollars. The government needs that now, especially with the weakening peso," Pangilinan said.

Pangilinan is confident, however, that the transaction will be sealed this month or by early April.

"NTT has been very positive about its investments in PLDT. We have our financial and legal advisers working to close the transactions by end of March. But we do have to obtain certain approvals from the SEC and the like so that we anticipate that it will take until the end of March to close. As far as I know, there are no major issues that stand on the way of closing but we don't know what will happen between now and March 31," he explained.

Under the deal, NTT is set to subscribe to 12.2 million common shares of PLDT in cash, amounting to approximately P14.7 billion, representing 15 percent of the company, in exchange for its 37.2 percent stake in Smart.

The amount, in turn, will be used by PLDT for its service improvements and expansion programs, for general working capital purposes, for investments in Smart and other subsidiaries and for repayment and prepayment of certain existing debts.

However, Pangilinan said that NTT can only release the amount once the deal is closed, thus, the need for the government to expedite the release of necessary documents.

Meanwhile, Pangilinan said that the financial condition of Piltel does not affect its relationship with NTT.

"They (NTT) are fairly happy with the way Piltel's debt restructuring is proceeding. They're comfortable with the options we presented to them. I believe that eventually, Piltel's creditors would come to terms with the situation. The equity of Piltel went down from P8 billion in 1998 to P4 billion in 1999 because of the losses. We have to recapitalize, otherwise, the company will have no future. NTT appreciates that," he explained.

Piltel has about P34.9 billion in unpaid obligations to creditor banks, bondholders and Japanese equipment supplier Marubeni even as PLDT is confident that the overall debt restructuring program will be completed within the fourth quarter of the year.