Nenaco creditors amenable to 10-yr payment extension

The creditors of Negros Navigation Co. Inc. (Nenaco) are amenable to a proposal that will allow the cash-strapped shipping firm to settle its debts over a 10-year period, boosting Nenaco’s chances of getting back on track and turning around its loss-making operations.

Nenaco’s rehabilitation receiver and former C&P Homes Inc. chairman Sulficio Tagud told reporters yesterday that the shipping firm’s creditor-banks seemed open to the debt restructuring proposal.

"In general, they are supportive of the rehabilitation plan. We have met with a number of banks and so far they have been receptive to the proposed 10-year extension of debt repayment," Tagud said.

Tagud, however, was quick to add that no agreement had yet been reached with the creditor-banks as there are still some issues that needed to be threshed out.

He said some creditor-creditor banks are concerned on how they would be able to collect payments from Nenaco in its debt restructuring proposal, Nenaco sought a one-year grace period on interest payments and a three-year grace period on the principal amount.

Among Nenaco’s creditor-banks include the Development Bank of the Philippines (P350.54 million), Bank of Commerce (P127.65 million), Equitable-PCIBank (P51.56 million), Prudential Bank and Trust Co. (P37.77 million), Metropolitan Bank and Trust Co. (P10.73 million). Dutch firm Debis Financial (P108.22 million), Pioneer Insurance (P63.34 million), and Export and Industry Bank (P29.013 million).

Tagud said the Manila Regional Trial Court, which granted Nenaco’s petition for corporate rehabilitation and suspension of debt payments, has scheduled a hearing on Aug. 7 to allow creditors and the management of Nenaco to come up with a viable and acceptable recovery program.

He also disclosed that Nenaco had tapped auditing firm Sycip Gorres Velayo and Co. to conduct a third-party audit on its books and records to disprove allegations it had misrepresented its financial condition.

The purpose of the audit, Tagud said, is also to reconfirm the entries in Nenaco’s balance sheet that do not match the claims of the creditors.

Early this month, Nenaco was fined by the Securities and Exchange Commission for failing to make an accurate and complete disclosure of its true financial condition.

In particular, Nenaco was fined for its failure to comply with Sec. 17 of the Securities Regulation Code, which requires all listed corporations to disclose any unknown trend, event or uncertainty that might adversely affect their liquidation position.

In its reply to the show-cause letter issued by the SEC, Nenaco said it had nothing to report at that time because its finances showed positive operating results, sufficient to support operations as shown in its statement of cashflows for 2002 and 2001.

Metro Pacific Corp., which owns 97 percent of Nenaco, said it is exploring a number of options to bring its financially-troubled shipping unit back on its feet again.

MPC said it has initiated a comprehensive internal audit and review of Nenaco’s business and operations to deal with areas with deficiencies.

The court’s granting of a debt reprieve is seen to be the first step towards the implementation of the shipping firm’s rehabilitation program.

Nenaco was forced to seek a moratorium on its debt payments to shield it from any foreclosure proceedings initiated by its creditors and to allow it to continue its business operations.