Beyond Cable in talks with two strategic investors

Beyond Cable, the holding company of merged SkyCable and Home Cable, is now in talks with two strategic investors interested in buying a 33.3-percent stake in the business.

STAR sources revealed that both are foreign companies currently engaged in the cable business outside of the Philippines.

In other developments, ePLDT, the information and communications technology company of telecom giant Philippine Long Distance Telephone Co. (PLDT), has dropped plans to get a third party strategic investor.

ePLDT co-managing director Ariel Roda said at least five foreign firms have expressed interest in a possible partnership. "But there is no need to get a third party anymore since we have found out that we know more about the business than most entities we have been dealing with," he said.

PLDT’s ICT arm as of last month already posted a positive cash flow, and according to Roda, it might take two to three years before they register a net income.

Meanwhile, both foreign companies want to buy outright shares in Beyond Cable, but may have to settle for other forms of investments like depository receipts, convertible notes, or convertible loans, due to a constitutional provision that prohibits foreign ownership in a broadcast company and provides for a 100-percent Filipino ownership.

Cable is still classified as broadcast, but there is now a bill pending in Congress that declassifies cable as a form of broadcast, and will, therefore, allow foreigners to partly own cable businesses up to 40 percent.

SkyCable, owned by the Lopez group, last year merged with Home Cable of the PLDT group. A holding company, Beyond Cable was created with the Lopez and PLDT groups each owning a 50-percent stake. It is now looking for a strategic investor that will purchase a 33.3-percent stake in the business, leaving the two original owners with an equal stake of 33.3-percent each.

The two combined cable outfits now account for a market share of more than 70 percent.

ePLDT co-managing director Ray Espinosa said in an interview that discussions are still ongoing with prospective strategic investors, and that prospects that the cable bill will be passed into law or not is one of the items being discussed.

The passage of the cable bill will determine whether foreigners can buy shares outright in Beyond Cable or whether the company will just have to issue other forms of ownership that could be converted later on into equity once the bill is passed into law," he said.

Right now, Home Cable is 50-percent owned by Mediaquest as equity investor and 50 percent by PLDT through convertible notes being a partly foreign-owned company, according to Espinosa. Mediaquest is a 100-percent owned subsidiary of PLDT’s beneficial trust fund, the retirement fund of company employees.

Eventually, the PLDT group’s stake in Beyond Cable will be managed by ePLDT, which will handle all PLDT subsidiaries dealing with multi-media (transport or infrastructure side) and eBusiness, Mediaquest will continue to handle multi-media, but more on content.

Meanwhile, Espinosa revealed that Beyond Cable management has already submitted the restructuring plan for the combined debts of Sky and Home Cable amounting to more than P3 billion to the respective creditors of the two cable companies.

He said that what may be taking long as far as the talks with the creditors is concerned is "finding the right formula "as far as how to treat the debts.

One option that Home Cable and the creditors are looking at is converting part of the debt into equity.