The Philippines second largest telecommunications company Globe Telecom has agreed to buy out the remaining shares of Bayan Telecommunications Holdings Corp and Lopez Holdings Corp in local operator Bayan Telecommunications (Bayan) for PHP1.83 billion (USD40.51 million), according to a filing to the Philippine Stock Exchange on Tuesday. Ayala-led Globe is purchasing just over 70.763 million shares held by the two firms in a deal that will increase its holding from 56.87% to 98.57%, following the recent approval by the National Telecommunications Commission (NTC) of a rehabilitation plan for insolvent Bayan.
As reported by TeleGeography’s CommsUpdate, on 2 July the telecoms watchdog approved a joint application from Globe Telecom and Bayan for the conversion of the latter’s USD423.3 million of debt into equity, effectively paving the way for its takeover of the ailing operator. In a filing to the Philippine Stock Exchange, the pair confirmed that under the debt-to-equity conversion the ‘creditor’ – Globe Telecom – will take a controlling stake of at least 54% of Bayan’s outstanding shares. Bayan has been under court-assisted corporate rehabilitation since 2003, and in November 2013 Globe submitted a request to the NTC seeking approval for its plan to take control of Bayan. The first phase of conversion had been completed the previous month, when Bayan issued common shares equivalent to 39% of the company to Globe and its senior creditors. However, the watchdog dragged its heels after pressure from a number of key Filipino players, including PLDT and NOW Telecom (formerly Next Mobile). In October last year the Court of Appeals issued a temporary restraining order on the takeover, following the receipt of a new motion filed by PLDT which argued that the long-running takeover violated Republic Act No. 7925 – or An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services – claiming that Globe’s spectrum holdings would increase dramatically if the merger were to be approved.