UPDATE: Globe Telecom Offers to Buy Bayantel's Balance of $200 Million Debt Notes

   By Rhea Sandique-Carlos and Cris Larano 
 

(Updates throughout)

MANILA--Globe Telecom Inc., the Philippines's second-largest telecommunications firm by sales, (GLO.PH) said it launched a tender offer Tuesday to buy the balance of Bayan Telecommunications Inc.'s $200 million worth of debt notes due 2006.

The offer involves buying the remaining principal amount of $184.5 million, Globe said in a statement to the stock exchange.

Globe, which counts Singapore Telecommunications Ltd. and Philippine conglomerate Ayala Corp. as major shareholders, also reached a separate deal with bondholders including global distressed debt funds, according to a person familiar with the deal, amounting to about $293 million worth of Bayantel's debt. Those bondholders include Goldman Sachs Group Inc.'s special situations group, U.S. funds Clearwater Capital Partners and Avenue Capital, and U.K.-based Spinnaker Capital, according to the person.

The amount Globe will pay will depend on the acceptance level of the tender offer, the company said. For instance, it will pay $280 for every $1,000 worth of notes if the acceptance level is less than 75%. The tender offer will expire Dec. 18.

If the tender offer is successful, Globe will become the major creditor of Bayantel and will perform the roles of Bayantel's creditors in respect to the rehabilitation plan, Globe's chief financial officer Albert de Larrazabal said in a statement.

"Potentially combining Globe's assets and capabilities with (Bayantel) through collaborative business efforts will enable both companies to become more competitive and will help accelerate the completion of Bayantel's rehabilitation," he said in a statement.

Globe said it is also offering to buy the debt of Bayantel affiliate Radio Communications of the Philippines Inc. It didn't specify an amount.

Globe said it has been in talks with debt-ridden Bayantel "that will enable both companies to become more competitive in the current business environment."

Globe and Bayantel already share radio frequencies to ease congestion problems, particularly that being experienced by cellular subscribers of Globe.

The deal is the latest consolidation in the country's telecoms sector, after Philippine Long Distance Telephone Co. acquired a majority stake in mobile service provider Digital Telecommunications Philippines Inc. in March 2011.

Bayantel is the telecommunications unit of Lopez Holdings Corp. (LPZ.PH).

Citigroup Inc. advised Globe on the transaction.

-Isabella Steger contributed to this article.

Write to Rhea Sandique-Carlos at [e-mail] and Cris Larano at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires