MPC pares debt to P18.2-B as of Dec 31

Metro Pacific Corp. (MPC), the local flagship of the First Pacific Group of Hong Kong, has managed to reduce its interest bearing debts to P18.2 billion from P18.5 billion as of end-December last year.

In a financial report filed with the Securities and Exchange Commission, MPC said that while it was able to pay off P1.2-billion worth of debts during the first nine months of the year, this was largely offset by the reclassification of its convertible preferred shares amounting to P720 million and the restructuring of about P227 million of unpaid interest into long term debt.

MPC reclassified its series 1 convertible preferred shares from equity to current portion of long-term debt, following the exercise of the put option by its preferred shareholders.

This reclassification, according to MPC, resulted in increased total liabilities from P28.2 billion at yearend 2001 to P29.1 billion as of Sept. 30 this year.

Consolidated assets as of end-September 2002 declined by 14 percent to P60.9 billion from the yearend 2001 level of P70.5 billion, principally as a result of the additional impairment provision of P7.2 billion, reflecting the possible loss to MPC should there be a foreclosure on its shares in Bonifacio Land Corp. (BLC).

MPC’s shares in BLC secure certain loans, including its $90-million loan from Larouge B. V which the holding firm used to fund the payment of principal, premium and interest of the foreign currency denominated convertible bond issue of a subsidiary.

The loan from Larouge bears annual interest of 15 percent and is secured against 28.7 million or 50 percent of the outstanding BLC shares.

As a result, MPC’s net losses widened to P8.6 billion in the first nine months of 2002 compared with only P2.2 billion the previous year. This also accounted for MPC’s share in the net loss of banking affiliate, First e-Bank of P604.5 million in which MPC has increased interest of 83 percent from 32 percent a year ago.

For the third quarter alone, MPC reported a consolidated loss before non-recurring items of P1.5 billion, an improvement on last year’s P1.6-billion loss. This was attributed to lower financing charges, reduction in operating expenses, the combined effect of various cost-cutting measures implemented and the incurrence of certain restructuring costs in 2001.

MPC registered revenues of P4.07 billion in the first three quarters of the year, down by 25.86 percent from P5.49 billion a year earlier.

The holding firm continues to conduct an extensive review of all of its financial obligations, both secured and unsecured, and the values of its assets and those of its subsidiaries. This review confirmed that, while MPC is presently unable to repay its maturing loan obligations as of Sept. 30, 2002, the firm has more than sufficient assets to cover its liabilities.

MPC and subsidiary Bonifacio Land Corp. suffered significant losses in their current operations starting in the fourth quarter of 2001.

The company’s debt reduction program, which was approved by MPC’s board of directors last Feb. 28, 2002 includes the sale of certain assets to creditors for immediate relief of debt obligations, request for an extension of grace period for interest and principal repayments and lowering of interest rates, and the conversion of certain debts to equity in the businesses of subsidiaries.

The completion and successful implementation of the plan depends to a large extent on the outcome of negotiations with creditors and the improvement in the Philippine property market which would allow the disposition of various development properties of MPC and its subsidiaries at a reasonable profit.

As of end-September, MPC and BLC were still in discussion with their creditors on a bilateral basis with a view towards finalizing their overall debt reduction solutions and arriving at a rational debt-restructuring program.