Capwire seeks more time from creditors

Capwire Telecommunications is seeking more time from its creditors for the payment of its principal debts, amounting to around P736 million, to enable it to use the funds for its expansion program.

Including the capitalized portion, capwire owes its creditors close to P1 billion which was the subject of a debt restructuring which began just recently. Capwire is in the first year of its eight to 9-year debt restructuring program.

In an interview, Capwire executive vice president and chief operating officer Maureen V. Santiago said that the company has submitted a revised business plan that would ensure that revenues are sustained via the offering of new services.

The first tranche of the principal debt, which accounts for around 70 percent of the total, has a grace period of two years which the company wants extended to four years. The first tranche of the loan falls due in 2003. For the second tranche, which accounts for the remaining 30 percent and which has an original grace period of three years, Capwire wants this extended to five years.

Santiago explained that lesser cash flow constraints will allow the company to invest its funds into the planned new businesses, such as the data business, which Capwire hopes will contribute as much as 60 percent of the company’s revenues by next year, compared to the present 40 percent. The balance will still come from the voice business, primarily.

At present, the bulk of the company’s revenues still comes from international long distance, hubbing, termination, international satellite communications network.

It already offers Internet access via its wholly owned subsidiary WaveNET, but company officials feel that the data business still has a lot to offer.

The company also revealed plans to seek a joint venture partner that could put in at least $10 million (around P500 million) to finance the expansion. However, company officials said the possibility of selling part of Capwire’s equity to raise additional capital has not been discounted.

But talks with prospective investors, which were originally scheduled before the fiscal year ending on June 30, will have to be postponed, pending approval of the revised business plan. "But there is strong interest from some parties, who can contribute both funds and technical expertise to the company," Santiago said.

She also said that they were originally targeting operating revenues of around P400 million, but the company may have difficulty hitting P300 million for the company’s fiscal year ending June 30, 2001.