ABS-CBN reaches accord with short-term creditors

ABS-CBN Broadcasting Corp. has secured a P3-billion exchangeable note facility with majority of its short-term creditors to refinance its current loans and for working capital needs.

ABS-CBN director for finance Oliver Calma told the Philippine Stock Exchange that about 88 percent of its total short-term loans will be covered by the facility, as it expects more creditors to take part in the loan restructuring.

"Until recently, all existing short-term creditors of ABS-CBN have graciously allowed the extension of the maturity of their credits, as long as interest payments are current and all short-term creditors are maintained on a pari passu basis on loan payments," he said.

At end-2001, the broadcast giant’s short-term borrowings amounted to P3.865 billion, an increase of P1.564 billion from a year ago. The company said the increase was originally intended to finance capital expenditures and to be refinanced by the bond issuance, which was shelved due to the unforeseen occurrence of the Sept. 11 terrorist attacks in the US.

The facility, which is secured by a mortgage trust indenture over substantially all of the assets of ABS-CBN, will enhance its loan maturity profile as its current ratio will improve to 1.90 times while maintaining its net-interest bearing debt-to-equity ratio at 0.45 times.

Calma said although two of the company’s short-term creditor banks have indicated their non-participation, the amounts due these banks represent only about one percent of the total consolidated assets of ABS-CBN and seven percent of its total short term loans.

To date, the outstanding principal obligations with the two banks amount to P100 million and $3.6 million.

ABS-CBN posted a 34-percent drop in net income last year as operating expenses and financing charges increased by a faster rate than its revenue stream. At the end of 2001, it earned P1.484 billion, down from P2.261 billion in 2000.

While the Lopez-owned anchor firm of the Benpres group of companies registered nearly a 13-percent growth in revenues mainly from airtime sales, contributions from its international subsidiaries and additional revenue from a new new unit, cable channel producer Creative Programs Inc., its operating expenses went up by 24 percent year-on-year.

Consolidated revenues rose to P10.51 billion, on the back of a five- percent increase in airtime sales. However, operating expenses bloated 24 percent to P7.561 billion, mainly due to higher production and depreciation costs and other subsidiary related expenses.

Aside from its flagship VHF station Channel 2, ABS-CBN controls several other media companies such as UHF channel Studio 23; cable channel ABS-CBN News Channel (ANC) ; online news provider ABS-CBN Online; radio stations DZMM (AM) and DWRR (FM); film outfit Star Cinema; recording studio Star Records and cable firm Sky Vision. — With Ted Torres