2 groups eye Asian Diamond Plans

At least two local groups are eyeing the take over of cash-strapped pre-need firm Asian Diamond Plans following the latter’s failure to conclude a deal with the Singaporean-American firm Sovereign Group.

Miguel Madrigal-Vazquez, head of the Federation of Pre-Need Plan Companies and concurrent president of Permanent Plans Inc., said two local investor groups have signified interest to take over the operations of Asian Diamond, which has been hard pressed to meet the minimum paid-up capital requirement.

However, he refused to identify the identities of the two groups as negotiations are still ongoing.

Emil P. Aquino, head of the Securities and Exchange Commission’s Non-Traditional Securities Department, earlier said Asian Diamond would need around P35 to P50 million to correct its trust fund deficiency.

While it cannot sell new plans, Asian Diamond is required to continue meeting obligations to existing planholders.

Aquino earlier encouraged pre-need firms with plans of further expanding operations to a look at Asian Diamond to spur consolidation and mergers in the industry. This, he said, would allow smaller pre-need firms to cope with the prevailing financial difficulties and meet the minimum paid-up capital and trust fund requirements.

The SEC earlier reimposed a moratorium on the acceptance of applications for the establishment of new pre-need companies unless the new firm to be created will take over the operations of an existing pre-need company.

The moratorium does not apply to companies that will acquire the shares and/or the assets and liabilities of existing pre-need companies.

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 type of plan.

To be able to sell two plan types, pre-need firms must have a paid-up capital of P75 million and for three-plan types and those selling traditional education plans, a P100 million paid-up capital must be maintained.

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

The minimum capital requirements are meant to ensure that the companies are able to meet their obligations to planholders.