Globe to issue $300-M 10-year bonds

Leading mobile phone service provider Globe Telecom has approved the issuance of up to $300 million in 10-year bonds in one or more offerings to finance its network expansion and infrastructure upgrading program for this year.

In a disclosure to the Securities and Exchange Commission, Globe senior vice-president and chief financial officer Delfin Gonzales Jr. said the issuance is consistent with the company’s funding program for 2002.

Globe, which is a joint venture between Ayala Corp., Singapore Telecom, and Deutsche Telekom, is spending around $258 million this year for new projects. The $258 million will basically be used to finance Globe’s Phase 8B expansion program which will be implemented starting the second quarter of 2002. Around 60 percent of the capex will be used for the cellular business expansion, while another 30 to 40 percent will be for wireline transmission facilities.

In addition to the $258 million, the company still has $350 to $400 million that will be carried over from last year for projects that have been started.

In an interview with The STAR, a Globe official explained that the company is not yet sure whether it will issue the entire $300 million bonds. It will depend on a lot of factors, including market conditions,the official said.

The company is also looking at other possible sources of financing, including borrowings, equity infusion, and suppliers’ credit.

Globe in 2001 registered a P4.305-billion net income last year as against P1.55 billion in 2000. Its EBITDA (earnings before interest, taxes, depreciation, and amortization) margin improved from 47 percent in 2000 to 53 percent in 2001. The company’s debt-to-equity ratio also performed better at 1:07 last year as against 1:41 in 2000.

In 2001, Globe’s capital expenditure reached $577 million, of which 78 percent was allocated for the wireless business. The company also operates a wireline business, under the name Globelines.

Meanwhile, in another SEC disclosure, the Philippine Long Distance Telephone Co. (PLDT) confirmed that it was engaged in preliminary discussions with the Japan Bank for International Cooperation (JBIC) as well as a number of other financial institutions regarding possible financing facilities.

JBIC officials said that they are now in the process of reviewing PLDT’s finances. The bank, which was the result of the merger between Japan’s Overseas Economic Cooperation Fund (OECF) and the Export-Import Bank of Japan, has been a traditional lender of PLDT and has huge exposures in other local projects, including the Metro Rail Transit (MRT) III phase one. JBIC and the Metro Rail Transit Corp. consortium are in talks over possible financing for phase two.

Regarding the sale of equity interest in its wireless subsidiary Smart Communications, Inc., PLDT reiterated that it has not yet decided on the stake it is willing to sell, the structure and terms of the transaction, the valuation of the Smart shares, as well as the identity of the potential investors at this time.

The STAR has reported that PLDT is currently negotiating with leading US firm American International Group (AIG) for the sale of less than 10 percent stake in Smart. PLDT owns 100 percent of Smart, which it bought in 1999.

PLDT has around $1.3 billion in loans that are maturing between 2002 and 2004. Officials said that around $650 million of this will be raised from internally generated funds while the rest will be financed via loans and possibly equity infusion. KfW of Germany earlier extended a $149-million loan to PLDT.