Mabuhay Satellite debt restructuring program hits snag

The P6-billion debt restructuring program which Mabuhay Philippines Satellite Corp. is working out with its creditor banks again hit a snag as both parties failed to agree on details of the transactions.

Mabuhay president Gabriel Pimentel said yesterday that the main source of conflict lies in the interest rates on the firm's unpaid obligation. He did not provide specific figures.

"There are still a number of issues being discussed. Primarily, we cannot agree on the interest rates . . . they want it higher, we want it lower," he said.

He pointed out that while the banks are willing to enter into such a restructuring program, their respective boards of directors have yet to approve Mabuhay's proposal.

Although Pimentel is confident that the discussions will yield a positive result this year, he admitted that they could no longer predict when it would happen.

"We hope the creditors would approve our proposal within the second quarter of this year, but we cannot say for sure. I do not want to make predictions anymore," he said.

Mabuhay is negotiating with a syndicate of seven local banks since last year for a restructuring agreement on other terms of the loan, except for the principal repayment term which has already been amended.

Under an Omnibus Credit and Security Agreement entered into by Mabuhay to obtain credit facilities, the banks will issue standby letters of credit with an aggregate stated value not exceeding $115 million (P4.5 billion) in favor of the US Export-Import Bank as security and a term loan to Mabuhay in the aggregate amount of $65 million (P2.5 billion).

Mabuhay has an existing credit agreement with EximBank wherein the latter established credit facilities of up to $107 million (P4 billion) to finance a portion of the costs of purchasing Agila II satellite.

Mabuhay entered into a restructuring agreement with EximBank on Jan. 8, 1999 for an amended payment terms of the loans.

Meanwhile, Pimentel expressed apprehensions that the good showing of Mabuhay this year might affect the banks' response to the restructuring terms being proposed by the company.

According to him, the banks might have a mistaken notion that Mabuhay could already pay its debts once it makes profits or at least breaks even.

Manuel Pangilinan, president and chief executive officer of the Philippine Long Distance Telephone Co. (PLDT) which owns 61 percent of Mabuhay, already announced that with the growing demand for data, there are now companies requiring satellite services.

Such surge in demand, Pangilinan said, augurs well for Mabuhay which has now rented out practically all of its transponder space unlike in the past when there were hardly any takers.