NDC writes off P4 B in bad investments

The Economic Coordinating Council (ECC) has allowed the National Development Co. (NDC) to absorb some P4 billion in losses due to bad investments and loans to such companies as the controversial First Centennial Clark Corp. and the National Steel Corp.

Trade and Industry Secretary Manuel Roxas II told reporters that the ECC approved the NDC decision to clean up its books as the government’s investment arm gears up for financial restructuring.

Roxas said the financial restructuring was based on the recommendations of SGV & Associates which was hired by NDC to conduct a review and revaluation of the company’s investments to isolate problem accounts and possibly write off some of its investments and receivables.

According to Roxas, NDC would off-load a total of P1.5 billion in government-guaranteed loans and receivables to First Centennial and P1.8-billion worth of shares in NSC which government no longer expects to recover.

Roxas said NDC’s holdings in NSC will be written off completely as the company faces foreclosure after two failed bids.

NDC also has P900 million in equity representing government’s 60-percent interest in the bankrupt First Centennial Clark Corp. as well as P60-million worth of loans and receivables.

First Centennial, which had to shut down after incurring huge operational losses, owed up to P1.4 billion. Government spent P390 million last year to service these loans and another P420 million is expected to be spent on debt servicing this year.

No longer part of the restructuring, was a P410-million loan to the Philippine National Construction Co. (PNCC). Roxas explained that since there are plants to privatize PNCC, there is no need to restructure these loans which he said could still be recovered by the NDC.

Roxas said NDC is also off-loading some P790-million worth of exposure to the LIDE Management Corp. which runs the Leyte Industrial Development Estate.

According to Roxas, the review of NDC’s assets is part of the effort to mark the market for possible sale of more government assets held by NDC as the state investment arm cleans up its book of accounts.

"We are just recognizing reality here," Roxas said. "NDC has investments and receivables that are, at best, on shaky grounds and we want to be able to isolate these problem accounts."