Benpres proposes interim payments for obligations

Benpres Holdings Corp. intends to make semi-annual payments of about $6.9 million for its various peso and dollar-denominated obligations even as it remains in discussions with its creditors for the approval of its balance sheet management plan (BSMP).

"Although Benpres has not reached an agreement with its creditors on the BSMP, it is commencing interim payments as earlier announced. These interim payments are being made as a good faith gesture by Benpres," corporate secretary Enrique Quiason told the Philippine Stock Exchange.

Nevertheless, he added Benpres will again fail to make timely payments of obligations included in the BSMP: first the principal amount of $150 million for its Eurobonds due on Dec. 19, 2002 and second, the BayanTel convertible preferred shares due in January 2003 with an original principal amount of $130 million.

Quiason said under the BSMP, Benpres has proposed to make payments every six months at a rate of one percent above the 182-day Treasury bill rate for the peso-denominated obligations and one percent above Libor (London interbank offered rate) for the dollar loans.

Last Nov. 30, Benpres made its first interim payment of $6.9 million for the June 1 to Nov. 30, 2002 period. The payment covered the P2 billion in long-term commercial papers (LTCPs); the $150-million Eurobonds; the $130-million BayanTel convertible preferred shares; and the BayanTel put options valued at no more than $50 million.

He added that other guaranteed obligations such as that of Maynilad Water Services Inc. and ABS-CBN Broadcasting Corp. are being serviced by the subsidiaries themselves.

Earlier, JP Morgan Partners (BHCA), L.P. and Chase Manhattan International Finance Ltd. joined the Asian Infrastructure fund of the AIG Group in demanding payment for their option shares in Benpres telecom unit BayanTel.

Based on a shareholders agreement (SA) entered into by Benpres with certain shareholders or option holders of BayanTel, the shareholders have the option to require the repurchase of their shares, under certain conditions, "upon the occurrence of certain events specified in the SA or in 2002, whichever comes first."

Last Oct. 2, the Lopez-owned holding company, said it also failed to pay the interest for its LTCPs, the fourth time it did so this year.

Benpres issued P3-billion worth of LTCPs in Aug. 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 on Oct. 1 2003 with interest at 1-1/8 percent above the 91-day Treasury bill rate, payable in quarterly arrears.

In addition, Benpres failed to make timely payments on its 7.875-percent Euronotes due last June 19. The company issued the equivalent of P7.754-billion worth of five-year Euronotes, issued in 1997 and listed at the Luxembourg Stock Exchange.

Benpres is saddled with nearly $597 million (approximately P31 billion) in total debts, about a third or over $200 million of which are falling due this year.

Under its balance sheet management plan, the company will seek the consent of its creditors for the restructuring of all liabilities, 86 percent of which are dollar-denominated as the company explores various options to address its debt problems.

These options include the divestment of its non-core assets and a freeze on new investments and capital calls on its infrastructure projects.