PLDT’s debt level is currently at $2.8 billion, more than 95 percent of which is foreign denominated and around $1.3 billion maturing between 2002 and 2004. To meet maturing obligations, the telecommunications company is managing its liabilities to match projected cash flows and maturing debts. One way is to replace some of these with longer term debt and looking for replacement credit and refinancing opportunities with traditional lenders.
PLDT president and chief executive officer Manuel V. Pangilinan said this facility from KfW is very important to the company as it is a key initial milestone in successfully implementing the comprehensive liability management program to address debt maturities in 2002 to 2004.
He said he expects other traditional lenders of PLDT to provide similar support to the company’s ongoing liability management initiatives.
"We are deeply appreciative of the continuing commitment and support KfW has given PLDT and we remain fully committed to achieve management’s objective in improving our operations and internal cash generation. We are encouraged that the serious efforts we have placed in our liability management program are starting to bear fruit," Pangilinan said.
The KfW facility is a nine-year loan inclusive of a two-year grace period and is to be disbursed over a three-year period. It partly enjoys the guarantee of Hermes, the export credit agency of the Federal Republic of Germany. Continued disbursement of the facility shall be subject to PLDT’s success in implementing its other financing initiatives based on an agreed plan and timetable.
Pangilinan said he expects half of the $1.3 billion needed to meet maturing obligations to come from cash flows and half from refinancing.
But since internally generated funds may not be enough, PLDT is looking for investors to purchase up to a 20-percent stake in wireless subsidiary Smart Communications in order to raise around $300 to $400 million.
The company has also been engaged in serious cost-cutting measures, including reducing the percentage of overtime to total personnel compensation budget to three percent and eventually to zero.
It also significantly reduced its capital expenditure budget to P20 to P22 billion for the whole PLDT group this year. This amount is broken down as follows: P12 billion, Smart; PLDT fixed line business, P8.5 billion; ePLDT P500 million; and the rest, for other subsidiaries.
PLDT is, likewise, looking once more at the possibility of floating bonds amounting to $250 million due to better financial and economic prospects here and abroad. It earlier planned to undertake the exercise in September but had to defer it indefinitely following the Sept. 11 terrorist attacks on the US.
Pangilinan said he is optimistic that 2002 will be a better year for PLDT. In fact, he expects PLDT to end 2001 with a net income of P3 billion, from P1.11 billion in 2000.