Globe to redeem peso bonds

Listed Globe Telecom Inc. will redeem corporate bonds worth P3.02 billion two years ahead of time in a bid to take advantage of the prevailing low interest rates.

In a disclosure, Globe announced that the early redemption of five-year fixed-rate peso bonds would take place next month. The bonds are not due until 2014.

“Given the low interest rate environment, the company has an opportunity to refinance the loan at lower costs and save the company some money,” Globe chief finance officer Albert de Larrazabal said in a text message.

Bondholders will be paid in cash at a redemption price of 102 percent of the principal, plus interest accrued until Feb. 26, 2012.

“As the optional redemption date falls on a non-business day, payment to each bondholder will be made available on the next business day,” Globe said Tuesday in its disclosure.

The securities will also be delisted from the Philippine Dealing Exchange Corp. (PDEx), the country’s fixed-income market.

The bonds were issued in February 2009 to fund the company’s capital expenditure needs at the time.

Last December, Globe secured a P5-billion floating rate note facility from the Banco De Oro Unibank Inc., the country’s top lender. The proceeds were used to fund its expanded capex and refinance loans.

Globe is carrying out an $800-million modernization program to improve network quality and customer experience, increase voice and data capacity, drive down costs and prepare the network to meet the future needs of customers.

Globe president Ernest Cu earlier said the five-year modernization program would have an impact on the telco’s finances, with an estimated $388 million worth of equipment to be decommissioned in five years, on top of the $790 million to be spent.

With close to 30 million subscribers at the end of September, Globe is currently the country’s second-largest phone firm. But its market share is less than half of its rival’s, Philippine Long Distance Telephone Co., which now has more than 60 million users on its network.