SEC gives opposing VMC camps 15 days to work out compromise

The Securities and Exchange Commission (SEC) is giving the two feuding parties in Victorias Milling Co. 15 days to work out a compromise solution for the firm’s rehabilitation or face the gloomy prospects of liquidation.

SEC Chairperson Lilia Bautista said a compromise deal between VMC management/stockholders and the SEC-appointed management committee (mancom) and the creditor banks is one of three alternatives that will be pursued to finally end the sugar firm’s long-deyed rehabilitation problem.

The country’s oldest sugar processor has a pending rehabilitation plan after it sought debt relief from the SEC in 1997 as a consequence of the Asian financial crisis and the slump in the sugar industry. VMC had over P5 billion in debts in 1997 and this would have ballooned to more than P7 billion due to interest charges.

Bautista said the two parties should strike out an agreement on the rehabilitation program, including the amount of additional capital infusion needed. The SEC official likewise said the designation of a chief operating officer (COO), which has lately been a thorny issue for both parties, should be finalized to avert further complications in pursuing the rehab plan.

The VMC management has contested the mancom’s appointment of former National Development Co. general manager Arthur Aguilar as COO. The VMC board has also recommended that its chairman, economist Bernardo Villegas, take the vacated place of former VMC chairman and CEO Manuel Mañalac in the seven-man mancom.

Bautista said if the two blocks still cannot agree on the rehab terms, two other options can be considered by the SEC. One alternative is to bring back Mañalac, the biggest individual stockholder in VMC, in the VMC board and SEC mancom and leave it to them to work out a rehab program within two years. Mañalac and his associates effectively control 30 percent of the sugar company.

But Bautista added after the two-year debt relief extension, VMC must be able to present an agreeable rehab plan to the SEC, its stockholders and creditors.

Under the SEC’s rules on corporate recovery, companies that have sought debt suspension and are pursuing rehabilitation are given only a year to wrap up their rehab program or else their assets will be liquidated as in the case of the National Steel Corp.

The SEC has recently indicated it would undertake a review of all pending debt suspension and rehabilitation programs that remain unresolved after a year or more, to determine if these cases can be turned over for liquidation.

VMC has been under debt relief for about four years now. – Conrado Diaz Jr.