Bayantel rehab bid not seen to benefit Extelcom

03/16/2009

Trans Digital Excel Inc., the creditor-turned-shareholder of Express Telecommunications Co. (Extelcom), said Bayan Telecommunications’ alternative rehabilitation plan will benefit only Bayantel to the prejudice of its bigger shareholders.

Plaridel Bohol II, counsel for Trans Digital, said Bayantel’s plan is primarily designed to complement and enhance the operations of Bayantel, which is also under rehabilitation although it has not had Extelcom’s success in settling its debts.

He said Bayantel wants to use Extelcom’s assigned frequencies in a scheme that does not really aim to revive Extelcom as a viable business concern.

Bohol noted that Bayantel had long given up on Extelcom and allowed its stake to be diluted due to its unwillingness to put in more capital to pay P9 billion in debts.

He said Bayantel had unsuccessfully tried to wrest control of Extelcom shortly after acquiring its 40 percent stake from Marifil Holdings while blocking efforts to make it a successful business by refusing to infuse capital which was critical for business growth, thus forcing other shareholders to advance funds in order to sustain operations.

In addition, because of its earlier representation on the Extelcom Board, Bohol said Bayantel was made privy to Extelcom’s plan to upgrade from its analog AMPS network to the digital GSM standard. Not long after, Bayantel obtained its own GSM frequency assignment to become a direct competitor of Extelcom.

By virtue of a court-approved rehabilitation plan, Bayantel’s stake in the company was decreased along with those of other shareholders in a debt-to-equity conversion scheme designed to wipe out Extelcom’s debts as the first step in bringing the company back into a viable business.

After ignoring the Extelcom rehabilitation proceedings initiated by Trans Digital for several years, Bayantel is now claiming that it was deliberately kept ignorant of the plan, and that it has a better rehabilitation plan for the company.

Bohol pointed out that this contention has already been rejected by both the Manila Regional Trial Court and the Court of Appeals which described Bayantel’s claim as “unbelievable.”

He explained that when mismanaged companies piles up huge debt and are unable to pay creditors, creditor banks are left with no choice but to sell their debt papers since they are not in the business of running businesses.

Banks usually sell their debt papers to hedge funds that discuss with management how they will be paid. If satisfied with the repayment plan, they will support management but, if unsatisfied, they will bring company to rehab.

In remote cases, management is able to retain control of “mismanaged” company. In the case of Bayantel, it restructured its multitude of creditors for a good 19 years and retained control of the company — 19 years is worse than a new loan — it is nearly half a lifetime.

Back to top

For comments about this website:Webmaster@tribune.net.ph
The Daily Tribune © 2006