In a briefing with reporters following the company’s stockholders meeting yesterday, Estrellado said ABS-CBN will use internally generated cash flows accumulated from savings through higher revenues and cost control measures to pay off its debts.
Estrellado said the company’s stable EBITDA (earnings before interest, taxes, depreciation and amortization) margins ensure it can meet all outstanding debt obligations. The network settled P1 billion worth of debts to creditors last month, effectively reducing its outstanding debt to P4.8 billion of which another P1.1 billion is due within the year.
The repayment is estimated to improve ABS-CBN’s debt-to-equity ratio to 37 percent, from 44 percent as of end-December 2003.
The bulk of ABS-CBN’s long-term debt is its exchangeable notes facility agreement (ENFA) with local banks and financial institutions. The ENFA, which was executed in September 2002, is secured by a mortgage trust indenture over substantially all ABS-CBN’s assets.
Excluding the $120-million loan to be secured from a syndicate of private banks, Estrellado said ABS-CBN is expected to be debt-free over the next three years. While the terms of the new loan have yet to be firmed up, the company wants the maturity of the loan stretched to five years to allow them to finance their capital expenditures.
ABS-CBN is negotiating with four banks, including ABN-Amro, for the release of a $120-million loan to pay off maturing debts and fund the cable operations of subsidiary Sky Vision Corp.
The new loan will be secured by the company’s real property and certain equipment and other assets and will be guaranteed by ABS-CBN’s subsidiaries.
Meanwhile, ABS-CBN chairman and chief executive officer Eugenio "Gabby" Lopez III, said they expect their international arm, ABS-CBN Global Ltd., to contribute 40 percent to 50 percent of the media outfit’s total revenues in the next five years.
"By next year, we’ll see a more significant growth in ABS Global. We realize that the only way to grow is to go abroad. There will be a natural evolution towards expanding overseas," Lopez said.
International operations currently account for 15 percent of the ABS-CBN Group’s overall revenues.
To further boost revenues, the network is eyeing to expand its cable programming services in Taiwan, Singapore and Hongkong. "We are now in discussions with a major cable provider in each of these countries," Lopez said.
Through The Filipino Channel (TFC), ABS-CBN offers a 24-hour all-Filipino cable and satellite service in North America, Japan, Indonesia, New Caledonia, Cambodia, Saudi Arabia, the Gulf States, Papua New Guinea and Europe.
ABS-CBN had also set up a cable and direct-to-home satellite in Europe last December. North America, though, remains ABS-CBN’s major cable market with at least 130,000 subscribers.
As of end-December last year, TFC had 1.3 million subscribers and this figure is expected to double in the next five years.
Meanwhile, Estrellado expects ABS-CBN to post a 10 percent growth in profits for the first quarter this year, driven by the robust performance of its international operations. The company reported a first quarter profit of P108 million last year. "The company’s performance is within the expected growth for the year," he said.