Piltel makes exchange offer to bondholders

The Pilipino Telephone Corp. (Piltel) announced yesterday that it has made a formal exchange offer to the holders of $183 million (more than P9 billion) worth of convertible bonds guaranteed by Piltel, one of the last remaining steps towards the much-delayed rehabilitation of the debt-saddled company.

Piltel owes about P35 billion to various parties, including the bondholders, creditor banks, and suppliers, each group holding around one-third of the total debt.

These bonds were originally issued in 1996 by Piltel International Holdings Corp., a wholly owned subsidiary of Piltel, and are redeemable at the option of the bondholders on Jan. 17, 2002.

The exchange offer is being made as part of the comprehensive restructuring of Piltel’s debt. Bondholders accepting this offer will receive bonds (exchange bonds) in exchange for the existing bonds. The exchange bonds generally have the same features as the existing bonds except that the exchange bonds will bind the accepting bondholders to the master restructuring agreement (MRA).

Holders of the exchange bonds will receive a package similar to other participating creditors under the terms of the MRA. The bondholders have until Jan. 23, 2001 to respond to the exchange offer.

"I am extremely pleased that we have now been able to issue the formal exchange offer to the Piltel convertible bondholders as this marks another important step in the eventual rehabilitation of the company, according to Napoleon Nazareno, Piltel president and chief executive officer.

The bondholders represent the third major group of Piltel’s creditors, the other groups being the creditor banks and trade creditors or suppliers, including Marubeni Corp., that need to be restructured. Piltel signed a series of agreements last week with its creditor banks and Marubeni Corp. which expanded the coverage of the original MRA to include other creditors.

The MRA signed with the banks for some $332 million early this year involved the conversion of $332 million in debt into peso-denominated Piltel convertible preferred stocks which can later be converted into preferred stocks in Philippine Long Distance Telephone Co., Piltel’s mother company.

Piltel expects a turnaround in three or four years time, as soon as the debt restructuring program has been finalized and the company’s rehabilitation program implemented. – Mary Ann Reyes