| Low rates prompt retirement of debt 5 years earlier |
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| By Lenie Lectura |
| Reporter |
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| Globe Telecom Inc. on Friday told the Philippine Stock Exchange that it has decided to redeem its $300 million unsecured notes on April 15, five years ahead of maturity. Globe chief financial officer Delfin Gonzalez Jr. said in a letter to the exchange that the company was able to raise P5 billion through a note facility arranged by Standard Chartered Bank and secure a $50-million term loan with the The $50-million loan is a five-year facility with a floating interest rate. Proceeds of the facility will be used to refinance other, more expensive debt, the company said. Globe recently signed an underwriting agreement with Standard Chartered Bank for a P5-billion corporate note issue for the proposed refinancing. The balance will be covered by internal funds. Owned by Singapore Telecommunications Ltd. and Philippine conglomerate Ayala Corp., Globe earlier said it will redeem the notes to take advantage of the low interest rates in the local and foreign markets. Gonzalez said the early retirement of the debt will generate an estimated P2.32 billion in savings in interest expenses and cut Globe’s total foreign and local debt to about $650 million by the end of this year, from about $800 million at the end of last year. “We expect to realize significant savings if we prepay the notes and refinance it at current interest rates, Gonzalez said. “This will not undermine our core operating performance and will even improve our longer-term financing cost profile as after-tax savings of P464 million a year in interest expenses is generated over the remaining life of the notes.” Globe has allocated $350 million for capital expenditure this year, up 21 percent from last year’s $290 million. The company’s net profit rose 15 percent last year to a record P11.8 billion, helped by sustained growth in wireless subscribers. However, fourth-quarter profit went down 36 percent to P2.5 billion on account of higher depreciation costs and lower foreign exchange gains The company’s wireless subscribers stood at 15.7 million at end-December 2006. |
http://www.businessmirror.com.ph/02262007/companies01.html
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