CAP in talks with Europe-based investment bank for add’l capital

The pre-need company College Assurance Plan, Inc. (CAP) is negotiating with a European-based investment bank which could provide the much-needed capital infusion to address concerns about the firm’s trust fund deficit.

Securities and Exchange Commission (SEC) chairman Lilia R. Bautista said she was told by CAP officials that the entry of a new investor will enable the firm to generate about P8 billion.

"That’s what they said. If this deal pushes through, they will sell their assets and they will supposedly earn P8 billion," she said.

CAP requested the SEC for another month to firm up ongoing talks with the potential investor. The company is hard-pressed to find a white knight that would prevent the SEC from taking over the company if negotiations break down.

"Company representatives have sought for an extension of month to give them more time to negotiate with this potential investor," said Bautista.

Previously, CAP’s first vice-president Bobby B. Cafe, disclosed that the company is in talks with three  prospective investor groups that have expressed interest in pumping in about  P100 million into the company.

One from Asia, a fund management firm, and  another from North America which proposed to be a strategic partner and wants to utilize CAP’s marketing network. The other group is composed of  investment bankers. 

The company is confident it could find a new investor before the end of  the year. 

CAP has assured the SEC that it has an asset of P20.53 billion over a projected 30-year period, more than enough to cover its reported trust fund variance of P17.16 billion covering the same period.

In effect, CAP has an asset surplus of P3.37 billion to meet maturing plans covering that period.

Café said the company’s trustee banks which were  tasked to conduct asset valuation of CAP, admitted hastiness in submitting its report to the SEC last April 15 and failed to reflect the total value of all company assets. 

Among CAP’s trustee banks include Metropolitan Bank and Trust Co., Bank of the Philippine Islands, Veteran’s Bank, Allied Bank, and Bank of Commerce.

"The trustee banks admitted in a meeting with the SEC, actuary, the auditor, and CAP that they failed to include the actual value of our real estate assets because they rushed to meet the deadline imposed by the SEC. Some of these assets were even valued as raw lands when in fact there have been considerable  developments in those areas already," said Café.

About  P1.49 billion or 78 percent of the total value of its real estate assets were excluded in the trustee banks’ yield rate computation.

CAP said a total of P10.578 billion composed of real estate inventory, accounts  receivable, valuation increment on CAP land and buildings, portions of the Metro Rail Transit (MRT) bond valuation not in the financial statement, and recovery of investment in Fil-Estate Management, Inc. were not included in the yield rate computation.

CAP has projected to raise P9.955 billion from its asset build-up program covering the period 2004 to 2008 to cover part of its reported trust fund deficit.