Prime Orion unit acquires Lepanto Ceramics loans

Prime Orion Philippines Inc. (POPI), an investment holding company associated with the Guoco Group of Malaysia, said one of its units acquired the loans extended by Hong Kong & Shanghai Banking Corp. to tilemaker Lepanto Ceramics Inc., an affiliate of POPI.

In a disclosure to the Philippine Stock Exchange, POPI said its indirect unit Orion Brands International Inc. (OBII) acquired the loans valued at $7.17 million and P15.97 million for a cash consideration of $1.6 million and P3.43 million, respectively.

POPI said the assignment of the HSBC loan to OBII reduced the group’s consolidated loans and accrued interest by P571.5 million.

POPI has interests in real estate and property development, manufacturing and distribution of ceramic tiles and construction-related materials, financial services and integrated forest, logging and paper operations.

The holding company is engaged in an asset disposal program to pare down debts.

It continues to undertake a number of initiatives to strengthen core assets including Pepsi Cola Products Phils. Inc., Tutuban Properties Inc. and First Lepanto-Taisho Insurance Corp.

It earlier disclosed it was in talks with a potential strategic investor to inject the needed capital for a stake in Lepanto Ceramics.

The money will be used to repay existing debts and raise working capital to jumpstart and stabilize Lepanto Ceramic’s operations.

In return, Lepanto Ceramics will issue new ordinary shares equivalent to the capital infusion plus additional secondary shares.

The resulting initiatives would substantially reduce Lepanto Ceramic’s existing debts to creditor-banks to a more manageable level of P400 million from P2.5 billion.

Negotiations are also ongoing with existing local and foreign creditors banks of Lepanto Ceramics for the restructuring of its debts.

The proposed loan restructuring scheme involves a combination of loan reduction through buy-out, negotiations for discounts and conversion into equity.

Prior to the currency crisis in 1997, POPI was among the leading holding companies in the country boasting a proven track record of profitability due to its investment portfolio in the property, manufacturing and financial services sector and its strategic alliance with the Guoco Group, one of the largest and most respected business conglomerates in Asia.

The group was seriously weakened by heavy debt service and cost increases resulting from the lingering effects of the regional crisis.

It continues to be affected by high debt service and limited working capital at both parent and subsidiary levels.