SEC rejects bid of VMC on alternate rehabilitation

The Securities and Exchange Commission (SEC) has rejected the petition of Victorias Milling Corp. (VMC) to nullify the company’s alternative rehabilitation plan (ARP) submitted by the SEC-appointed management committee (mancom).

The commission en banc has issued an order upholding the Nov. 29, 2000 order by the SEC hearing panel approving the mancom-ARP and dismissing VMC management’s (represented by VMC chairman and president Manuel Manalac) own rehab proposal.

The corporate watchdog said after going through several revisions mainly in the touchy issue of addressing the company’s financial problems, VMC management had given its consent to the mancom‘s rehabilitation plan unless certain conditions are imposed.

"It would thus appear that there is a pattern of action by VMC management whereby after the mancom had agreed to the conditions it imposed, VMC management pursued the matter further by imposing new additional conditions, thereby holding a Damocles sword over the rest of the mancom members’ heads, that if mancom will not agree to his new conditions, VMC management would fight the mancom-ARP resulting in the non-implementation of any rehabilitation plan not to the liking of Mr. Manalac," the SEC said.

"This, the Commission cannot allow," the SEC emphasized.

VMC’s financial difficulties started in early 1997 when it defaulted in the servicing of its maturing debt obligations with 32 banks whose combined loan exposures amounted to about P3.4 billion. In July of the same year, VMC secured a suspension of debt payment from the SEC but was also ordered to constitute a mancom to oversee the company’s operation and rehabilitation.

The mancom along with VMC management and its financial advisor Bankers Trust jointly developed a rehabilitation plan which has since undergone several modifications," some of which have failed such as a subscription rights offering and the entry of an equity investor.

The SEC said it cannot permit VMC management to continue imposing additional conditions before giving its go-signal to the mancom-ARP, which could result in the non-implementation of any rehabilitation plan not to the liking of its officers and officials.