UCPB turns down bids for P15-B bad assets

United Coconut Planters Bank (UCPB) has turned down all bids for some P15-billion worth of bad assets put on auction late Monday due to disagreements over prices.

The UCPB auction would have been the first sale of bad assets under the Special Purpose Vehicle Act (SPVA) and would have qualified for incentives administered by the Bangko Sentral ng Pilipinas (BSP).

UCPB president and chief executive officer Jose L. Querubin said the bank received six sealed bids during the auction but four of the bids did not qualify and the remaining two were below the floor price.

Querubin pointed out though that UCPB had gone back to its financial adviser, PricewaterhouseCoopers, to discuss the possibility of conducting a second auction.

"We got feedback that the bidders wanted more time to be able to submit a more aggressive bid," Querubin said.

Querubin did not disclose the floor price used by UCPB but said it was based on the price range proposed by PricewaterhouseCoopers.

UCPB has about P22-billion worth of real and other properties owned or acquired (ROPOA) assets but bank officials said the market response to the sale of its bad assets had encouraged management to hold at least two more auctions this year.

The ROPOAs were bid out in five to six different portfolios, including two major real estate assets that would be packaged into a single portfolio.

"We have two major assets namely, the White Cove resort in Batangas and the Forbes Tower, a building right behind our head office," Querubin said.

Since these two assets are large enough, he said they would be sold as separate lots from the rest of the other ROPOAs. The White Cove resort and the Forbes Tower have an estimated book value of about P2 billion each.

Querubin said UCPB was considering two options for these two properties: either an outright sale or a joint-venture with any interested and qualified developer.

"We’re open to the possibility of holding on to our interests in a joint venture arrangement, depending on how the market would react," he said.

The rest of the ROPOAs, Querubin said, have been packaged into separate lots based on the proposals of PricewaterhouseCoopers.

If UCPB could complete the sale successfully, Querubin said there would be no need for the bank to unload its remaining non-performing loans (NPL).

"We can just go on restructuring and collecting on these NPLs rather than take a very deep haircut," he said.

Under the law, banks have until September this year to set up the special purpose vehicles and until the end of the year to sell their bad assets and bad loans in order to qualify for incentives.

According to Querubin, however, UCPB wanted to complete the entire transaction before September. "We intend to sell before the deadline," he said. "Initially, we hope to get at least P15 billion from this transaction."