Benpres Holdings defaults anew

Debt-saddled Benpres Holdings Corp. (BHC) said yesterday it would not be able to pay interest charges amounting to P19.61 million on its long term commercial papers (LTCPs) which fell due yesterday.

The company had earlier defaulted on its LTCP interest payments last June 17 and on its 7.875-percent Euronotes due last June 19.

In a disclosure to the Philippine Stock Exchange, the Lopez-owned holding firm said that "In lieu of such interest payments Benpres Holdings …From B-1

and any other payments under the LTCPs and the Euronotes, BHC has made certain proposals in relation to scheduled interest payments and principal repayments in accordance with the terms of its Balance Sheet Management Plan."

As of end-2001, Benpres had P2 billion in outstanding LTCPs and the equivalent of P7.754 billion worth of five-year Euronotes, issued in 1997 and listed at the Luxembourg Stock Exchange.

BHC issued P3 billion in LTCPs in 1996 to finance its investments in real property development, telecommunications, infrastructure projects and power-related projects of its subsidiaries and affiliates.

The LTCPs were offered and issued in two series, of which the first tranche of P1 billion was fully paid last year.

Under the terms, the next P2 billion will be repaid in one lump sum of Oct. 1, 2003 with interest at 1-1/8 percent above the 91-day Treasury Bill rate, payable in quarterly arrears.

But with nearly $597 milllion (approximately P31 billion) in total debts (about a third or over $200 million falling due this year) and a significant revenue draught due to some poorly performing subsidiaries, Benpres is hard-pressed to explore a number of options to unburden itself from the debt load and restore its long-term financial health.

Helped along by the New York-based Credit Suisse First Boston, BHC hatched a Balance Sheet Management Plan to address its maturing financial obligations as well as restore its long-term financial health.

The plan would require the reduction of debt, sale of non-core assets to raise cash and a moratorium on further investments and capital calls on its infrastructure projects.