Chinese firm taking control of Primeplan

A Chinese firm is taking control of pre-need company Primeplan International Corp. through the infusion of fresh capital to cover the local company’s paid-up capital deficiency.

Emil Aquino, head of the non-traditional department of the Securities and Exchange Commission, said Chinese firm Brighsun will inject the badly-needed capital to enable Primeplan to meet the minimum paid-up capital requirement of P50 million.

Primeplan was given until the end of August to settle its P14.8-million capital deficiency or it faces suspension of its license.

Under SEC rules, a pre-need plan firm must have a paid-up capital of at least P50 million to be able to sell at least one plan type.

Primeplan, which sells pension plans, has 6,336 planholders as of April this year.

Pre-need firms are required to gradually build up their capital to P100 million. New entrants, however, are required to have a paid-up capital of P100 million.

Before the passage of the new rules on capitalization, only eight companies had met the minimum capital requirement.

To date, 23 pre-need companies have complied with the P100-million paid-up capital requirement, which make them eligible to sell three plan types. Three companies, on the other hand, have met the P75 million levels, allowing them to sell two plan types and 18 other companies have met the P50- million requirement.

Amid a difficult business environment, pre-need plan firms experiencing tight liquidity problems are being urged to merge with bigger players to stay alive in this highly competitive business.

The Federation of Pre-need Plan Companies earlier objected to the proposed increase in paid-up capital, saying the increase could result only to closures and kill the multibillion-peso industry.

It said the trust fund, not paid-up capital, is more important in strengthening the pre-need companies and is the better answer to the protection of the planholders. – Zinnia Dela Peña