Bayantel questions ‘overly aggressive’ debt level by court-appointed receiver

The Lopez-owned Bayan Telecommunications Inc. (Bayantel) has expressed concern over the suggested level of sustainable debt and the role of its receiver over the duration of the company’s rehabilitation as contained in the proposed rehabilitation plan.

Bayantel chief finance officer Gary Olivar told The STAR that the court-appointed receiver is proposing a level of sustainable debt of about $370 million, which the company feels is overly aggressive in view of the business prospects.

"It imposes a bigger challenge on us. We maintain that the $275 million level in our own proposal is more appropriate," he said.

As to the receiver’s role over the duration of the rehabilitation, Olivar noted that what is being proposed is too long and broad.

Bayantel is currently working on a debt restructuring program involving $477 million in loans and is now under court receivership.

Its parent company Benpres Holdings earlier described the debt restructuring and rehabilitation plan as ‘uncertain’ as the court-appointed receiver and the creditors disagree over the recovery plan for the company.

According to Benpres chief operating officer Angel Ong, none of the creditors expressed support on the receiver’s recommendation, favoring instead the debt rehabilitation proposal prepared by Bayantel management.

Bayantel has asked the rehabilitation court to come up with a final restructuring program that defines the rights of the stakeholders involved in the restructuring.

"With a master restructuring document, possible arbitrariness and caprice of parties to the rehabilitation, especially the receiver, may be curbed and potential disagreements between the stakeholders of Bayantel may be minimized if not totally avoided," it told the court.

Last May 17, lawyer Remigio Noval, the court-appointed Bayantel receiver, submitted his proposed rehabilitation plan for Bayantel to the rehabilitation court. The various parties, including the debtors and both secured and unsecured creditors, were asked to submit their comments to the plan but none accepted the receiver’s plan.

Since none of the parties accepted the receiver’s plan, the court will have to decide on what plan to approve for Bayantel after considering all the submitted comments.

The Pasig Regional Trial Court last year granted the petition of Bank of New York, which sought the rehabilitation of Bayantel on behalf of creditors holding at least 25 percent of the firm’s total liabilities. Bank of New York serves as trustee for the holders of $200 million worth of 13.5-percent Bayantel senior notes due 2006. The decision in effect protects Bayantel from possible liquidation.

Two years ago, Bayantel sought the write-off of 25 percent of its unsecured debts (about $226 million) as well as 18 months worth of interest charges starting Jan. 19, 2001. The debt-ridden firm also asked that the payment period for its debts be stretched to 15 years with a five-year grace period on principal payments.