Debt at Piltel comes as surprise
First Pacific has admitted that the level of debt in the mobile phone subsidiary of Philippine Long Distance Telephone, Pilipino Telephone (Piltel), is higher than First Pacific thought at the time of its purchase of a 17.2 per cent stake in PLDT last November.
Earlier this month, 50.1 per cent-owned Piltel said it had entered talks to reschedule US$850 million of borrowings.
First Pacific spokesman Bob Sherbin confirmed yesterday this figure was larger than the one First Pacific had expected as a result of carrying out due diligence on PLDT.
Mr Sherbin would not give figures.
'It became apparent some time after we got in, in the last month or so, that the debts are larger than anticipated,' he said.
As part of its buy-in deal, First Pacific has taken management control of PLDT.
Mr Sherbin said that, although serious, the figure was 'not off by a wide margin' from First Pacific's original estimate.
Piltel is now in discussions with its lenders, comprising about 20 foreign and local banks.
The first meeting was held last Wednesday, and the next discussions are scheduled for the middle of next month.
Until then, payment of interest and principal on the loans had been suspended, Mr Sherbin said.
Asked why the due diligence process had failed to show up the true magnitude of Piltel's financial position, Mr Sherbin said: 'There are very few people in the Philippines who were aware of the magnitude of Piltel's financial difficulties.'