PLDT to convert bonds to increase stake in Digitel

MANILA, Philippines—Listed Philippine Long Distance Telephone Co. (PLDT) has announced the conversion of a bulk of its holdings of bonds issued by Digital Telecommunications Philippines Inc. (Digitel) to increase its stake in the operator of Sun Cellular.

In a disclosure, PLDT said its board had approved the exchange of 78.38 percent of the zero coupon exchangeable bonds due 2014, issued by Digitel and now held by PLDT. The bonds issued at $190 million now have a total face value of $590 million.

The company said the bonds would be converted into 14.64 billion common shares in Digitel, calculated on the basis of the redemption value of the 2014 bonds as of the planned exchange date of February 7, 2012. The conversion will be done at an exchange ratio of one Digitel share for every P1 of the bonds.

Following the exchange, only $11 million worth of the bonds will remain unconverted.

The conversion of bonds is part of PLDT’s consolidation of its holdings in Digitel. In January, PLDT completed its tender offer for shares in Digitel held by minority shareholders. This tender offer was triggered by PLDT’s acquisition of a 51-percent stake in Digitel from JG Summit Holdings Inc.

Following the tender offer and the conversion of bonds, the PLDT group will be in control of 98 percent of shares in Digitel.

With only 2 percent of Digitel still in the hands of minority investors, PLDT has filed a petition to have Digitel shares removed from the Philippine Stock Exchange.

PLDT management had said that keeping Digitel listed would offer no tangible benefits for the group since the parent firm itself was already on the market. Digitel shares fell 0.69 percent on Tuesday to close at P1.44 each.

After its acquisition of Digitel, PLDT now controls two-thirds of the industry in both subscribers and revenues.