ABS-CBN Corp. said Thursday its lenders approved a standstill agreement effective May 31 this year that will prevent a loan default or legal remedies.
A standstill agreement preserves the status quo and aims to delay any action by lenders which might otherwise take place.
The broadcast network of the Lopez Group did not provide more details, but said it agreed to the banks’ condition about placing certain assets of the company under mortgage.
“The existing lenders of the company today agreed to make its standstill agreement with the company effective, i.e. not to declare any event of default or to exercise any rights or remedies under existing loan agreements, after compliance by the company with the lenders’ condition of the creation of a mortgage and security interest over certain assets of the company,” ABS-CBN said.
Based on its 2020 annual report, ABS-CBN’s outstanding term loans amounted to more than P27 billion. Major lenders include Union Bank of the Philippines, Bank of the Philippine Islands and other local banks.
The company, which lost its congressional franchise to operate Channel 2, recorded a net loss of P7.22 billion in the first nine months of 2020, compared to a P2.59-billion net profit it booked in the same period last year.
Consolidated revenues tumbled to P17.03 billion in the nine-month period from P32.02 billion a year earlier.
ABS-CBN said about 11,000 workers lost jobs as a result of the closure of Channel 2, its main channel. ABS-CBN continues to air some of its programs through content partnerships with TV5 and Channel 11.
The National Telecommunications Commission issued a cease-and-desist order against company on May 5, 2020, prohibiting it from continuing broadcast operations.
The House committee on legislative franchises also passed a resolution denying the franchise application of the company.
Among the issues cited by the House committee for rejecting ABS-CBN’s bid for a new 25-year franchise were the alleged dual citizenship of ABS-CBN chairman emeritus Eugenio Lopez III, the possible violation of the constitutional limits on foreign ownership, reported labor and tax violations and other violations of the terms of its franchise.
President Rodrigo Duterte, himself, asked the NTC not to allow the broadcast network to resume operations unless the embattled media firm settles its tax deficiencies. The Lopez Group, however, denied having outstanding loans with the state-owned DBP.
Several lawmakers, however, filed bills to provide the broadcast network with a new 25-year franchise. These include the measures filed by Senate President Vicente Sotto III and Batangas 6th District Rep. Vilma Santos-Recto.