Philippine Long Distance's Smart to tender for Piltel debt

New York, March 22 - Philippine Long Distance Telephone Co.'s Smart Communications, Inc. subsidiary announced a tender offer in which it is inviting creditors of cellular phone company Piltel to sell their debt.

Smart Communications will offer either cash in U.S. dollars or pesos, dollar-denominated loans or Philippines sovereign-guaranteed bonds.

Options on offer to Piltel creditors are:

* Cash at the rate of $0.40 per $1 of Piltel debt up to a maximum of $20 million;

* Dollar-denominated Smart debt at the rate of $0.525 per $1 of existing Piltel debt. The new debt will mature in December 2007 and pay interest at Libor plus 100 basis points;

* Dollar-denominated Smart debt at the rate of $0.575 per $1 of existing Piltel debt. The new debt will mature in December 2008 and pay interest at Libor plus 100 basis points;

* Dollar-denominated Smart debt at the rate of $1 per $1 equivalent of existing Piltel debt. The new debt will mature in June 2014 and pay interest at 2.25%;

* For yen trade creditors, dollar-denominated Smart debt at the rate of $1 per $1 equivalent of existing Piltel debt. The new debt will mature in June 2014 and pay interest at 2.25% and will include a put option exercisable with 15 months' notice at 52.5% in December 2007 and 57.5% in December 2008;

* Dollar-denominated debt guaranteed by the Republic of the Philippines at the rate of $1 per $1. The new debt will have a 12-year maturity and a 2% coupon. Bondholders will not qualify for this option.

Smart, a cellular telephone company, said the proposed transaction will allow Philippine Long Distance Telephone to rationalize its wireless business segment. Smart will gain full access to Talk 'N Text's expanding subscriber base and improving revenues streams. Philippine Long Distance's wireless group is expected to benefits from the closer operational alignment of Smart and Piltel, an increase in the share in Piltel's revenues streams and certain other cash and tax savings.

Negatives will be increased interest expense and foreign exchange exposure from the issuance of new Smart debt.

Smart said it is in the process of obtaining the necessary consent and waivers from its financial creditors and guarantors of its debt to enable it to complete the offer.

Subject to a successful debt offer, Smart also intends to request consents from its financial creditors and guarantors of its debts to allow it to acquire Philippine Long Distance's interests in Piltel consisting of 767 million common shares or 45.3% of Piltel's outstanding shares and 59 million series K convertible preferred shares, convertible into Piltel common shares at a ratio of 170:1.

Smart's offer to buy Piltel debt runs until April 19.

The offer is subject to at least 75% of Piltel's existing being tendered including all of the yen trade facility, 67% of the peso and U.S. dollar facility agreements, $65 million face value of Piltel's conversion note bonds, 67% U.S. dollar trade facilities and 50.01% principal amount of the term notes facility agreement.

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