Caught in a seemingly endless slump in the real estate sector, MPC has been doing the rounds of its creditors to negotiate for better terms as it fights to trim down its P8-billion debt.
Sources involved in the negotiation between MPC and the SSS revealed that the property firm has offered SSS the choice pick between three parcels of land located in the Big Delta portion of the Global City.
The sizes of the land parcels, according to the source, range from 7,500 square meters to 8,300 square meters.
When Fort Bonifacio was turned over to the MPC in 1995, the partially-developed land was worth P3,300 per square meter. Values have since doubled but it was not immediately known whether the SSS would agree to the valuation of the properties.
The source revealed that negotiations were at a standstill because SSS was hesitant to receive land as payment for the loan considering its own worsening liquidity problems.
"We really need cash," said an SSS source. "Swapping the loan for the lot means that we might require additional investments in the future because the lot will not provide us income."
MPC’s P1.5-billion loan came from its guarantee for the flotation of long-term commercial papers (LTCPs) by its majority-owned subsidiary, Bonifacio Land Corp., which in turn manages the development of Global City.
The LTCPs guaranteed a yield of 10 percent and investors had an exit mechanism that allowed them to divest of their shares if BLC had proceeded with its plan to list at the stock market.
As early as 1996, however, the LTCPs were already converted into a loan of MPC because BLC was unable to sell lots in Global City as the slump in the property market continued to worsen.
Global City was the former Fort Bonifacio which the government turned over to the MPC group which made a successful bid for the right to develop what used to be the most expensive piece of land in the National Capital Region outside of the Ayala Center in Makati.
Designed as a multi-use commercial and residential complex, Global City was paraded as the alternative to the heavily-congested Ayala Center across the other side of EDSA.