Platinum Plans contests SEC show-cause order

Debt-strapped pre-need firm Platinum Plans, Inc. is contesting the show-cause order issued against it by the Securities and Exchange Commission (SEC), saying it is no longer under the SEC’s jurisdiction because of the petition for suspension of payments and rehabilitation it filed with the local court.

The SEC had ordered Platinum to explain why it should not be sanctioned for its failure to comply with the rules on the registration and sale of pre-need plans. Among these violations include non-submission of its actuarial valuation report, financial statements, collection and sales reports, and non-publication of financial statements.

Based on SEC records, Platinum has an actuarial reserve liability of P470.1 million as against trust fund assets of P192.76 million, resulting to a trust fund deficiency of P277.34 million. The company has also been found to have failed to remit monthly deposits to its trust fund, which is made up mostly of real estate.

The SEC has thus increased to P2.28 million the penalty it has imposed on Platinum for continued non-payment of the previous assessed penalties.

Platinum sought a moratorium on the payment of its debts to allow it to map out a viable recovery plan. The company said that given enough breathing space it would be able to settle all maturing obligations given the realizable value of its existing assets.

In its petition, Platinum said it could settle only up to P75 million of its maturing obligations to planholders. It intends to sell assets to raise funds to cover obligations to planholders.

Platinum is currently locked in negotiations with a Canadian firm that has offered to buy out the pre-need firm from the Salas family.

Platinum, however, said it remains uncertain whether a deal could be closed between the company and the prospective investor from Canada given the current controversies and the consequent operational and financial difficulties plaguing it.

It said the prospects of getting a white knight will require a period for normal due diligence. "This is best done under a rehabilitation climate with the supervision of the court and receiver so that the terms and conditions that will be discussed can have legal stability and protection," Platinum said.

Platinum said attracting a foreign investor will strengthen not only the company but restore credence and confidence in the pre-need industry as well.

According to the pre-need firm, the existing long-term commitments of Platinum towards planholders will be better protected with new resources and management.

Aside from a white knight, Platinum will also source fresh funds of P75 million to settle maturing plans.

Platinum also plans to offer a new homeowning system addressing the contractual savings capabilities of overseas Filipino workers and developing non-performing assets of banks suitable for housing, for which the pre-need firm can earn a hefty income estimated to be P2.2 billion from just one specific property.

The need to venture into a new business is due to the absence of a dealership license from the SEC for 2005.

The SEC is now investigating Platinum for possible filing of criminal charges for alleged misappropriation of funds that eventually led to the collapse of the pre-need firm.