GLOBE Telecom Inc. has increased its equity interest in Bayan Telecommunications Inc. (Bayantel) to nearly 100 percent after buying all of the shares held by Bayan Telecommunications Holdings Corp. (BTHC) and Lopez Holdings Corp. (LHC) for about P1.83 billion.
In a disclosure to the Philippine Stock Exchange (PSE) on Tuesday, Globe said: “The Transaction follows the conversion by Globe of Bayantel debt into equity provided under the resolution of Bayantel’s Rehabilitation Court (Regional Trial Court Branch 158 Pasig City) in SEC Case 03-25 dated August 27, 2013, and approved by the National Telecommunications Commission on July 2, 2015, as previously disclosed.”
The transaction involves up to 70.76 million Bayantel shares and increases Globe’s equity interest in Bayantel from 56.87 percent to 98.57 percent of outstanding capital stock.
Early this month, the National Telecommunications Commission (NTC) approved the acquisition by Globe of a 54-percent stake in Bayantel under a debt-to-equity transaction.
“The debt-to-equity conversion transaction between Globe and Bayan will precisely enable the latter’s continued viability as a service provider, allowing it to exit rehabilitation and enhance its current service offering to the public,” Globe General Counsel Froilan Castelo said in another statement.
Opposition from PLDT
Globe rival Philippine Long Distance Telephone Co. (PLDT) has opposed the joint application of Globe and Bayantel on grounds that the competition would gain significantly more frequencies per subscriber than the PLDT Group.
“If the Joint Application of Globe and Bayan is approved, Globe and Bayantel, which have only 37 percent share as against PLDT Group’s 62 percent share of the cellular and broadband market, would be acquiring a grossly disproportionate amount of frequencies in relation to its subscriber base,” according to PLDT.
Globe, however, argued that the points raised by PLDT were not the bone of contention.
“The only genuine issue in the instant application is whether or not the debt-to-equity conversion transaction between Globe and Bayan… would vest in the former more than 40 percent of the described capital stock of the latter,” it said in an earlier statement to the NTC.
Under a court-assisted corporate rehabilitation since 2003, Bayantel agreed to an amended rehabilitation plan that allowed Globe as principal creditor to covert its debt holdings equivalent to at least 54 percent of Bayantel’s outstanding shares into equity.