Already reeling from the poor financial performance and heavy debt load of BayanTel and Maynilad Water Services, Benpres’ net income had shrunk nearly 90 percent to P354 million in 2000. But this was further weighed down last year with P9.9 billion set aside for the decline in the value of its investments in, and advances to, BayanTel alone.
This figure includes the recognition of Benpres’ liability that may arise from its guarantee and commitments in the telecommunications company.
In June 2001, Benpres engaged the services of Credit Suisse First Boston as financial adviser to assist in reviewing the company’s capital structure.
Part of the financial advisory program is a Balance Sheet Management Plan designed to restore Benpres’ long-term financial health, anchored on a three-pronged approach: 1) reducing debt by eliminating contingent liabilities by bringing project financing of subsidiaries like Maynilad and Manila North Tollways Corp. to financial close; 2) raise cash by asset disposal and maximizing dividends from existing investments, as well as creating new streams of dividends from newly completed projects; and 3) reduce costs and investments until financial obligations are addressed, subsequently refraining from invest significant funds in its subsidiaries.
"I believe that this plan will preserve value for all our stakeholders, whose support will be vital for the plan to succeed. Once the plan is complete Benpres will emerge a leaner, less leveraged and more focused entity," said Benpres chairman Oscar Lopez.
Although a number of its subsidiaries, in particular flagship broadcast station ABS-CBN Broadcating Corp. and power unit First Philippine Holdings, posted profits, BPC said its financial balance sheet was greatly affected by the overall weakness of its other subsidiaries.