PLDT Inc. (PLDT) is seeking the permission of bondholders to revise the terms of their investment and allow the telco giant to raise more money to support its growth without breaching any debt covenants.
Specifically, PLDT wants to amend the debt to Ebitda (earnings before interest, tax, depreciation and amortization) ratio in its seven-year and 10-year bonds issued in 2014, a stock exchange filing on Friday showed.
The revision involves increasing the “maximum stand-alone” total debt to Ebitda ratio from 3.0:1 to 4.01:1.
The debt to Ebitda ratio is a measure investors use to determine a company’s ability to finance its loans. A higher debt to Ebitda ratio means a company is more leveraged.
In its filing, PLDT said the amendments would give it “greater flexibility to support, if necessary, higher levels of capital expenditures and general corporate requirements.”
PLDT cited a pipeline of network expansion programs “to serve the increasing data requirements of its customers so as to strengthen PLDT’s market position.”
PLDT earlier allotted a record P78.4 billion in capital spending in 2019 to upgrade and expand its mobile and fixed-line networks across the Philippines.
The company said spending in the near term would likely remain elevated. It also comes as the industry braces for more competition with the entry of a third mobile player: Dito Telecommunity, which is backed by China Telecom.
In its filing, PLDT said the amendments would align the ratio to PLDT’s outstanding debt capital market issuances with that of the existing bilateral facilities of both PLDT and its wholly owned subsidiary, Smart Communications Inc.
In typical cases, the breaching of key financial ratios could cause the covered loans to become due immediately.
For the current solicitation exercise, PLDT was referring to its P12.4-billion 5.225-percent bonds due in 2021 and P2.6-billion 5.28-percent bonds due in 2024.
The consent solicitation exercise will start on Oct. 16 and will expire on Nov. 15 this year, according to PLDT.
PLDT said it would pay each bondholder that delivered a properly and validly executed consent form a consent fee of P1 per P1,000 of the principal amount of the bonds.
PLDT has appointed BDO Capital & Investment Corp., BPI Capital Corp. and First Metro Investment Corp. as advisers for the consent solicitation exercise.