PLDT, Lopezes seal equity merger in Beyond Cable

The Philippine Long Distance Telephone Co. (PLDT) and the Lopez-owned Benpres group have finally agreed to merge their respective controlling interests in Home Cable and Sky Cable following the signing of a master consolidation agreement (MCA) between the two groups recently, The STAR learned.

The signing of the MCA and the merger of Sky and Home is expected to complete the consolidation of the country’s two leading cable television companies that began with a merger at the operations level.

Sky Cable is owned by the Benpres group through Sky Vision while Home Cable is owned by PLDT through Mediaquest/Unilink.

But the MCA did not define the exact mode of merger, which is still being deliberated and worked out between PLDT and the group.

Sources however disclosed that the merger is likely to occur through the acquisition by the Benpres group of Home Cable’s assets. In return for the assets, Sky Cable will be issuing shares to the PLDT group.

Under this scenario, Sky Cable will be owning Home Cable while the owners of Home will be holding shares in Sky Cable. All interests in Sky Cable, both by the Lopezes and by the PLDT group, will be consolidated in the holding company Beyond Cable.

As envisioned, Beyond Cable will have indirect ownership in Home and Sky Cable through the companies that respectively own them. The Lopez group will control 66.67 percent of Beyond Cable while the PLDT group will take in 33.33 perent.

The MCA signing had to wait until the respective creditors of Sky Cable and Home Cable have given their approval to the consolidation.

Earlier, Sky Vision Corp., Central CATV Inc., and Philippine Home Cable Holdings Inc. signed a memorandum of agreement with the creditors for the restructuring of a total of P2.5 billion in debts. The total outstanding principal obligations of the three entities stand at P2.517 billion, of which P1.35 billion is for Home Cable, P120.7 million for Sky Vision and P1.166 billion for Central CATV.

The MOA provides the general terms and conditions of a restructuring plan and shall be the basis for a debt restructuring agreement. With the signing of the MOA, the creditors of the three entities are granting their consents to the proposed consolidation of ownership of the PLDT group and Benpres group in these entities.

As part of the agreement, Sky Cable and Home Cable also committed to infuse $30 million or about P1.65 billion in new money within 60 days from the signing of the MOA.

The $20 million or about P1.1 billion will be sourced by ABS-CBN Broadcasting Corp., which like Sky Cable is owned by the Lopez group. The balance of $10 million will be sourced by both Sky Cable and Home Cable.

The money, which will be in the form of loans convertible to equity later, will be used to update interest payments to the banks and for use in operations to improve the viability of the cable business, as well as to complete the business plan and effect the merger of the two companies into Beyond Cable.

Part of the money will be used to invest in addressable set-up boxes that are expected to minimize, if not totally eliminate, cable tv piracy.

As to the payment of the principal obligation, the banks and the two cable TV operators have agreed under the MOA to work out an extension of payments over a period of time, taking into account the business plan prepared by Sky Cable and Home Cable.