CAP inks pact with Europe-based Int’l Global Capital Holdings AG

College Assurance Plan Phils. Inc. (CAP) has inked an agreement with International Global Capital Holdings AG (IGCH), a fund manager based in Europe, to help raise equity capital for the pre-need firm.

An official of CAP said IGCH will "provide financial advisory services to CAP with the end in view of raising equity capital " necessary to meet the pre-need firm’s obligations to planholders.

The CAP official said IGCH is primarily involved in financial management and is registered in Vaduz, Liechtenstein. Its officers include Adriano di Palma, executive vice-president of Sao Paulo Bank; Stephano Persichella. Vice-president of Sao Paulo Invest; and Giorgio Endrizzi, chief executive officer of Sofigen Trust.

The same official said IGCH is affiliated with all top 50 Western European banks, including Swissfirst Bank AG.

According to the CAP official, IGCH will only need to receive a bank-to-bank authenticated message of an Asset Safekeeping Receipt over CAP’s MRT bonds to evidence its existence, valuation and non-encumbrance.

This ASKR serves as a confirmation that CAP has this much assets.

Without an ASKR, investment banks would have to conduct extensive due diligence on a company to determine asset valuations.

CAP First Vice-President Bobby Café assured the public that the pre-need firm is committed to fulfilling its obligations to thousands of its planholders.

Café said CAP is now completing all the requirements needed for the approval of its application for increase in capital stock now pending with the Securities and Exchange Commission. CAP is raising its capital to P8 billion.

The capital increase would reflect the infusion of a P6-billion property owned by businessman Romeo Roxas in CAP. CAP is transferring a 3,000 hectare property in Quezon, which will be developed into an educational center.

In exchange for the property infusion, Roxas will get one board seat in CAP.

The SEC, however, did not set any deadline as to CAP’s compliance with the requirements since it has no more securities to the public.

SEC officials said they want to make sure that the needed funds are infused into CAP prior to renewing the latter’s dealership license.

As of end-2003, CAP’s Actuarial Reserve Liability or ARL stood at P25.7 billion while the trust fund which serves as the guarantee the preneed firm would be able to meet future obligations is only P8.5 billion. This has resulted to a trust fund deficiency of P17.2 billion.

The ARL is the present value of the preneed firm’s future liabilities.

Also part of the pre-need firm’s asset build-up program is the conversion of assets to equity which would be added to the trust fund, generation of interest income from loan programs, raising dividend income and securing fresh equity from interested investors.

Other measures aimed at plugging the trust fund deficiency include recognizing the value of developed properties which were previously valued when they were still undeveloped, recognizing real estate inventory or unsold land at the end of five years including outstanding accounts receivables at the end of five years from its real estate development projects, recognizing a portion of the MRT bonds that are not reflected in its financial statements and recovering an investment in Fil-Estate Management Inc.