Malaysian-owned MBf Inc faces liquidity problems

Another company faced by liquidity problems, the Malaysian-owned MBf Inc. plans to attract new investors and strategic partners to inject fresh capital for its financial restructuring program.

The publicly-listed financial service company, whose main subsidiary deals in the credit card business with its tie-up with Mastercard, has stopped its local operations since June last year due to the implementation of the restructuring plan and the divestment of its two subsidiaries.

Since 1997, MBf suffered significant losses from operations which led to a liquidity crunch making it difficult for the company to meet its obligations without resorting to borrowings.

To improve its financial condition, the company embarked on a financial restructuring program first implemented in early 2000 when majority stockholder MBf International Ltd. put in P19 million in fresh funds and converted part of its advances aggregating to P63.7 million into additional equity.

The restructuring plan mainly resolves around the fresh capital fund infusion, eliminating or reducing deficit by converting inter-company debts into equity, and divesting its investments in the losing subsidiary.

Further, in August 2000, the company and MBf Card Inc., along with minority stockholder Grogram Ltd. entered into a compromise agreement with Unitrust Development Bank to settle with finality all of the bank’s claims. The agreement transferred in favor of Unitrust the company’s 100-percent equity ownership of MBf Card and also upheld the validity of the action taken by Unitrust in foreclosing the pledge over the company’s 27.92-percent shareholdings in Unitrust.

As a result of the restructuring plan and the compromise with Unitrust, MBf became a shell company with cash and cash equivalents and some inter-company receivables as the only remaining assets amounting to a total of only about P357,000. – Conrado Diaz Jr.