Piltel creditors say debt buy-back deal not Smart enough

2 Jun 2004

Filipino mobile operator Smart Communications says it may forge ahead with plans to buy the debt of its loss-making sister firm Pilipino Telephone Corp (Piltel), despite failing to gain enough support for the move from the company’s creditors. According to Philippine Long Distance Telephone (PLDT), the parent company of both mobile operators, Piltel creditors offered up just 68.4% of the cellco’s USD368 million of debt for exchange into Smart ‘obligations’, well short of the 75% minimum required to proceed. Under the proposed deal, Smart is offering to acquire the sister company’s debt, with a discount of up to 60%, in the hope that the move will then open the way for it to buy a 95% equity stake in Piltel. PLDT is itself believed to be mulling a major reorganisation under which Smart would become the group’s new parent within the next three years. The Piltel acquisition is seen as a step in the right direction to achieve this.