The agreement, which covers 75.4 percent of PT&T’s total indebtedness, calls for the conversion of about P4.4 billion in debts into equity, a restructuring of the remaining balance over a 10-year period conversion of all lenders to secured bases, and a reorganization of the company’s board of directors.
PT&T also signed a dollar facility agreement and a peso facility agreement together with the master restructuring agreement.
Company officials said the restructuring agreement is tailor-fit to the situation that PT&T presently faces. "If achieved, the plan will guarantee the full principal payment to the lenders," they emphasized.
"The company further views this agreement as an acknowledgement by its lenders of the importance to the country of a public utility like PT&T. The lenders have demonstrated a willingness to enter into a partnership with the company as they have committed to rehabilitate the troubled firm," officials added.
The 11 lenders who signed the agreement include Asia Trust Bank, Bank Leumi Le-Israel BM, Development Bank of the Philippines (DBP), East Asia (AEA) Capital Corp., JP Morgan Chase, Keppel Bank Philippines Inc., Korea Telecom Philippines Inc., Penta Capital Corp., Philippine National Bank, Tomen Corp. and the United Coconut Planters Bank.
This leaves 23 creditors who have yet to agree to the restructuring. PT&T’s creditors include All Asia Capital & Trust Co., Allied Banking Corp., Asia Trust Bank of Commerce, Bank of the Philippine Islands, Bank Leumi, DBP, East Asia Capital, Equitable PCIBank, Government Service Insurance System (GSIS), Hanvit Bank, International Exchange Bank, JP Morgan, Keppel, Kookmin Bank, Korea Communication Engineering Ltd., Korea Telecom Phils., Land Bank of the Philippines, Lehman Brothers Asia, LG Information & Communications, Manulife Financial, Metrobank, Optimum Development Bank, Orix Metro Leasing & Finance Corp., Penta, PNB, Planters Development Bank, Premiere Development Bank, RCBC, Security Bank, Ssangyong Singapore, Tomen, UCPB, and United Overseas Bank Phils.
The restructured loan amounted to P1.99 billion and $128 million covering 34 creditors. Half of the outstanding principal amount shall be converted to PT&T common shares while the remaining balance will be repaid over 10 years inclusive of a five-year grace period on principal payments. Interest rates area three-month Libor plus two percent and a maximum of eight per annum in case of the dollar-denominated loans, and 91-day T-bill plus two percent and maximum of 13 percent per year for the peso loans.
All secured loan will be secured by a mortgage trust indenture (MTI) covering substantially all of the company’s fixed assets, including licenses, permits, and other similar assets. Previously unsecured creditors now covered by the MTI will release the suretyships issued in their favor by Republic Telecommunications Co. (Retelcom) which is PT&T parent company.
Lenders who did not sign the MRA will be allowed to join the restructuring subject to signing an accession agreement.
Also under the agreement, PT&T’s board shall be reorganized and the participating lenders shall be entitled to elect four directors inclusive of the independent director.
Retelcom shall have the right of first refusal to purchase all PT&T shares arising from the debt-to-equity conversion at a price equivalent to the bonafide offer of a third party purchaser.