QC RTC okays amended rehab plan of Philrealty

The Quezon City Regional Trial Court has approved the amended rehabilitation plan for cash-strapped Philippine Realty and Holdings Inc. as it found the company’s business still viable.

In an order issued yesterday, the court said Philrealty deserves a chance at rehabilitation in accordance with the amended plan, which calls for the settlement of bank loans through a combination of dacion-en-pago (payment-in-kind scheme) and debt restructuring.

In approving the plan, the court noted that all creditor-banks were in agreement that Philrealty is susceptible to rehabilitation as it is solvent. The court also said there was no serious or significant objection to Philrealty’s proposal to settle debt through dacion.

"To the court, the amended rehab plan of petitioner deserves due consideration. It is the product of a well-thought out study based on verifiable data and based as well on the results of the meetings with the creditors. The recommended combination of a debt restructuring and dacion en pago as integral composition of petitioner’s amended plan is found to be fair and viable," the Quezon City RTC said.

The court said while the remaining creditor-banks do not totally and fully subscribe to the rehabilitation plan, the objections do not appear to be of such magnitude that would amount to a gross disadvantage for the reluctant creditor-banks.

The Quezon City RTC, however, has directed Philrealty, its rehabilitation receiver and creditors to file written reports at the first year of implementation of the recovery program and annually throughout the term of rehabilitation.

At the end of two years from the initial implementation of the plan, the court shall undertake a review of the entire rehabilitation plan to determine whether it should be continued or terminated.

The plan calls for the settlement of P1.31 billion in secured debt through dacion, the restructuring of P890.6 million in debt over a 10-year period, and the completion of the company’s Skyline Tower in the Andrea North Project in Quezon City, estimated to cost P1.18 billion.

Philrealty’s rehabilitation receiver considers the completion of the Andrea Skyline Project critical to the firm’s rehabilitation efforts "as this would restore public confidence on the ability of petitioner to continue and complete its on-going projects and undertake new projects in line with its main purpose of real estate development."

The cash flows expected from joint ventures or sale of Philrealty’s remaining assets will be used to complete the Andrea Skyline Project.

Philrealty will retain P957.2-million worth of properties which could be used for operations, joint venture development and sale.

The receiver expects Philrealty to raise about P3.89 billion in cash over a period of 15 years, assuming that the company can limit total administrative expenses to a yearly increase of five percent per annum, which the increase in rental/lease income should cover.

Total debt to secured creditor banks stands at P2.2 billion, P1.8 billion of which is owed to Metropolitan Bank & Trust Co., Philrealty’s biggest creditor-bank. Other secured creditor-banks include the Land Bank of the Philippines (P165.37 million), Prudential Bank (P168.53 million), and Export Industry Bank (P5 milllion).

Owing to tight liquidity problems as a result of the continued slump in the real estate industry since 1997, Philrealty sought a moratorium on the payment of its debts to prevent creditors from instituting foreclosure proceedings.

Once a high-profile real estate company, Philrealty is primarily known for its projects in the Ortigas Center, foremost of which is the Textite Towers – the headquarters of the Philippine Stock Exchange (PSE).

Philrealty’s other projects and landbank include the Alexandra Condominiums in Ortigas and lot properties in Tagaytay, Batangas, Quezon and Rizal.