Media giant ABS-CBN Corp. entered into a crucial standstill debt agreement with lenders after setting up assets as collateral.
The deal prevents ABS-CBN from being declared in default amid the devastating impact of the loss of its franchise and massive layoffs following the shutdown of its main TV broadcasting business by the Duterte administration in 2020.
In a stock exchange filing Thursday, ABS-CBN said the standstill agreement with lenders went into effect on May 31 of this year, although it did not disclose details of the deal and assets covered.
The network’s latest financial documents for the third quarter of 2020 reported debts of 21.5 billion pesos, most of which were long-term with 294.52 million pesos maturing within 12 months.
ABS-CBN accounted for the bulk of almost P16 billion while the balance was made up of debts from subsidiaries SkyCable and ABS-CBN International. ABS-CBN ended the period with cash and cash equivalents of 11.2 billion pesos.
While assuring creditors that they would be paid on time, the company’s loan agreements required it to have an “active government license to operate.”
Because this requirement was not met, ABS-CBN said the status quo was only achieved after the company complied with the condition of lenders to create a mortgage and security on certain assets of the society.
ABS-CBN’s efforts to renew its 25-year broadcast franchise have languished in Congress for years.
On July 10, 2020, Duterte’s allies in the House of Representatives finally voted to deny his franchise request, following previous threats from the president.
Despite the shutdown, ABS-CBN continued to broadcast on online platforms, pay TV and through airtime rental agreements with other TV broadcast companies.
It controls equipment, land assets, such as its sprawling headquarters in Quezon City, and a vast library of content, including popular movies and TV shows.
The company has not yet disclosed its results for the year 2020. In the third quarter, it recorded a loss of 7.3 billion pesos against 2.3 billion pesos in profit the previous year. Revenue, half of which comes from advertising, fell 47% to 17.03 billion pesos.
ABS-CBN previously told investors that it plans to capitalize on emerging digital opportunities and focus on its businesses that do not require legislative franchising.
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