SEC suspends sale of securities by two firms

The Securities and Exchange Commission (SEC) has suspended the registration of securities of aluminum maker Reynolds Philippines Inc. and debt-saddled mall developer Ever-Gotesco Resources Holdings Inc. for violation of securities rules.

The suspension of their permits to sell securities to the public was due to their failure to comply with the SEC’s reportorial requirements and pay the corresponding fines for violations committed.

Reynolds was slapped with a P66,125 fine for late filing of its annual report for 1999 and for non-submission of its quarterly report for the first quarter of 2000. The penalty remains unpaid.

In Ever-Gotesco’s case, the real estate development firm was assessed a P175,000 fine for its failure to disclose the names of its independent director and compliance officer. The company has yet to pay the assessed fines despite repeated demands from the SEC.

The suspension, according to the SEC, remains in effect until said requirements are complied with and the assessed penalties are settled.

The SEC said it would be constrained to revoke the registration of the company’s securities if both companies fail to settle their deficiencies within 60 days.

The non-submission of annual financial reports for 2000, 2001 and 2002 had caused the trading suspension of Reynolds shares since July 2001. Reynolds was last traded at the Philippine Stock Exchange on June 29, 2001 at P0.15 per share.

In explaining its failure to meet the exchange’s reportorial requirements, Reynolds said its external auditors have not been able to complete the audit of its financial statements.

Reynolds, engaged in the manufacture and distribution of aluminum sheets, foil used for packaging, container, construction, appliance and vehicle manufacturing industries, is the market leader in the Philippine aluminum manufacturing industry.

Reynolds shut down its manufacturing plant in Dasmarinas, Cavite in December 2000 due to tight liquidity problems that have hobbled its ability to service maturing debt obligations. It has continued to incur losses for its inability to maximize its capacities due to lack of working capital to support its operations as a result of the unwillingness of the banks to provide sufficient credit.

The debt restructuring agreement signed by Reynolds and its creditors failed to raise the working capital necessary to operate the company’s plant even to its minimum capacity.

Negotiations are ongoing between the board and the firm’s major creditors on the course of action to be taken to implement the debt restructuring agreement.