Shemberg expects favorable ruling

MACTAN, Cebu – Shemberg Biotech Corp. (SBC), a major global player in the seaweed processing industry, is optimistic it will get a favorable ruling on its motion to suspend payments of its loan to the Bank of the Philippine Islands (BPI).

The BPI of the Ayala Group of Companies, with a 10 percent stake in SBC, has a loan of about P60 million to the seaweed company, including accrued interests.

BPI, according to SBC chief executive officer Benson Dakay, has been consistently opposing the company’s 10-year rehabilitation plan which was approved by other creditors and firmed up through a favorable ruling earlier this year by Branch 11 of the Cebu Regional Trial Court (RTC) .

The RTC, in its ruling last April, said that 50 percent of SBC’s total loans will be converted to convertible zero-coupon bonds. The court also ordered the creditor banks to restructure the residual debts for a term of 12 years, including a two-year grace period.

BPI has since then, filed a motion for certiorari before the Court of Appeals, saying the approved rehabilitation plan was not feasible.

The bank said that while it accepted SBC’s interest payments for the first quarter this year, the payments were based on the company’s promissory notes which were not in accordance with the terms and conditions of the rehabilitation plan.

Dakay said SBC sought the court’s ruling that would direct the company’s appointed receiver Pio Go to order the suspension of payments to BPI.

In its motion, SBC stated: "Aside from being contumacious, the actuation of BPI in repudiating the terms of the rehabilitation program after having accepted it, is tantamount to deceiving the petitioner (SBC), who honestly tendered the payment believing it will be accepted, it will be applied according to the terms of the rehabilitation program."

Dakay added SBC asked the court to order Go to deposit the funds intended to pay BPI to an escrow account and to put at bay its release until the court issues its ruling.

SBC’s financial troubles began during the Asian financial crisis of 1997-1998, when its operations were adversely affected due to to its dollar-denominated loans and wild fluctuations in the foreign exchange. SBC’s loans reached P900 million.