Bayantel board sets meet to tackle issues related to $477-M debt

The board of directors of debt-strapped Bayan Telecommunications (BayanTel) will meet within two weeks to decide on several issues raised by the company’s creditors in relation to its proposed restructuring of some $477 million in debts.

Among the issues that will have to be decided upon by the board are the recommendation of the creditors for additional shareholders’ support especially on the part of the Lopez Group is well as a proposal for a conversion of the debt into equity.

"We expect to get back to our creditors for something concrete before the end of the year," BayanTel chief finance officer Gary Olivar told The STAR.

Earlier, BayanTel, a unit of the Lopez-owned Benpres Holdings Corp., asked its unsecured creditors to write off a quarter of its debts and interest charges for 18 months beginning Jan. 19 this year.

Some $226 million or around half of BayanTel‘s $447-million debts are unsecured. The unsecured portion is said to include the $200-million bonds with a maturity of seven years issued by the company in 1999.

BayanTel is proposing a 15-year repayment of its loans, including a five-year grace period on principal payments. Proposed interest rates are three-month London interbank offered rate (Libor) plus one percent for dollar-denominated debts and 91-day Treasury bill rate plus one percent for peso-denominated loans.

The proposed restructuring terms, according to BayanTel officials, are tailored closely to the ability of BayanTel to service debts. If the terms are accepted, BayanTel will not require new funds until 2007 and can begin servicing debt with equal quarterly amortization payments thereafter.

The debt restructuring proposal was based on a business plant that included the findings of independent auditor Arthur D. Little, which said that BayantTel’s operating plans, operating expenditures, and capital expenses were reasonable and that the company had a ‘quality network from a technical perspective.’

Olivar said during the interview that BayanTel‘s operating cash flow remains positive but the debts are just too big to be serviced now.

He also said the company has not discounted the possibility of new investors coming in, saying that "we have never stopped receiving expressions of interest."– Mary Ann Reyes