In a disclosure to the PSE, Belle corporate secretary A. Bayani K. Tan said the company has initiated talks with its creditors for a 90-day standstill arrangement to provide the flexibility in the payment and restructuring of its roughly P6.42-billion debt.
Tan said while the corporation generates sufficient cash flow to sustain operating needs, it is still seeking to ease its heavy debt service burden which has been made more difficult by the continued weakness of the peso and the delay in the entry of foreign capital.
"These factors have affected the timing of the capital raising exercise announced earlier this year," he said. Out of Belle’s P6.42-billion debt, the bulk at P4.325 billion ($86.5 million) consist of the dollar-denominated loans.
The talks with its creditors came following the resignation of Belle president and CEO Gregorio Yu from the company effective June 15, 2001 to give its major shareholders such as the Tan Guat-Ocier group and the SM Group of Henry Sy "a freer hand in implementing their vision and strategy for Belle."
Last year, Belle attempted to raise additional funds by way of a rights and warrant offering but a moribund stock market caused its postponement. However, Belle was able to undertake the offering of about $118 million in floating rate notes (FRN) for a debt-to-equity conversion scheme, out of which an equivalent of $49 million have been converted into Belle shares.
Also in line with its debt reduction program, Belle had disposed of non-core assets last year like Maginet, Indian TV-18, Lucky Star and some idle non-prime land, raising about P200 million.
To raise additional cash for its debt reduction scheme, Belle has likewise spun off a new subsidiary, Highland Prime Leisure Properties, whose assets consist of roughly 600 hectares of undeveloped land, subdivision lots and condominium units in Tagaytay and Batangas.
From a 100-percent Belle subsidiary, Highlands Prime will then be auctioned off to strategic investors. The early, two foreign groups and five local blocks, including the SM Group of Henry Sy, have expressed interest in the new company.
Aside from the equity infusion, Belle will raise additional funds from Highlands Prime by offering up to 10 percent of the new company to the public by the third quarter of this year. The initial public offering (IPO) will be a primary share issuance wherein existing Belle shareholders will be given first crack at subscribing to the new shares.