Foreign investor wants out of BayanTel

Another foreign investor group wants out of Bayan Telecommunications Holdings Corp. (BayanTel), putting its parent firm Benpres Holdings Corp. in another liquidity squeeze.

Benpres corporate secretary Enrique Quiason told the Philippine Stock Exchange that JP Morgan Partners (BHCA), L.P. and Chase Manhattan International Finance Ltd. had informed the company that they are also exercising the option to require Benpres to acquire class A shares in BayanTel.

Last week, the Lopez-controlled Benpres said Asian Infrastructure Fund, the regional investment arm of the AIG Group, had demanded payment for its option shares in BayanTel, one of the most debt-saddled units in the Benpres group.

Based on a shareholders agreement (SA) entered by Benpres with certain shareholders or option holders of BayanTel, the shareholders have the option to require the repurchase of their shares, under certain conditions, "upon the occurrence of certain events specified in the SA or in 2002, whichever comes first."

It was stipulated that the value of the option shares will be determined only when the shareholders exercise their option in October 2002. Benpres said it was their position that the price should not be more than $52 million (inclusive of subsequent relevant equity calls plus interest). Although the option holders have indicated that the value of the option is higher.

Quiason said Benpres has now put the cap on the price of the option shares at $45.5 million, equivalent to a six-percent stake in BayanTel, although "AIF is claiming a higher number of shares and a higher purchase price."

Based on the SA, the purchase price of the option shares shall either be the aggregate cost price in US dollars of the relevant option shares paid by the shareholders amounting to an initial investment of approximately $20 million plus interest at the US prime rate compounded annually, or just the fair market value of the option shares.

"The JP Morgan/Chase Group is claiming a higher number of shares and a higher purchase price than the $6.7 million recognized by Benpres Holdings in relation to this claim as disclosed in its annual accounts for the year ended Dec. 31, 2001," Quiason said.

He added that as with AIF, "the Balance Sheet Management plan of Benpres intends to address the settlement of the JP Morgan/Chase put option."