Pre-need firm TPG in talks with investor groups

Pre-need firm TPG Corp. said it is in talks with at least two investor-groups that will make it a much bigger and stronger company.

"We’re talking to two reputable groups that would make us 10 times stronger," TPG chairman Francisco Colayco said in a press briefing yesterday.

Colayco made this statement as he assured the firm’s planholders that management is doing everything it can to safeguard the interest of investors. He, however, declined to identify the prospective investors as talks are still ongoing.

Colayco also pointed out that TPG has submitted to the Securities and Exchange Commission (SEC) its audited financial statements and actuarial valuation report last June 15.

Colayco said he is hopeful that the pre-need firm’s planholders would approve its new program dubbed as Scholars Trust Fund with Equitable Pay-out for Unified Preservation (STEP-UP), an innovative and revolutionary plan to address the problem of continued availments by planholders of open-ended educational plans and ensure that more scholars still benefit from their plans.

Under the STEP-UP program, TPG will seek the approval of some 20,000 planholders for the conversion of the company from a purely pre-need entity into a holding company.

Colayco said the company will be converted into a cooperative that will have pre-need plans as one of its products.

Colayco said that while the conversion plan is being fine-tuned, the interest of planholders will continue to be preserved and enhanced since TPG will still be maintaining its pre-need license.

When TPG is finally converted into a holding company, planholders will be rewarded because the planholders’ educational plans will be converted into common and preferred shares in the new company, thus converting the planholders into owners of the new company who shall be entitled to their share of operating profits, Colayco said.

Acknowledging that the liabilities of open-ended education plans must be fixed as a first step to solving the problems caused by uncontrolled tuition increases, Colayco said the indefinite availment of open-ended educational plans is not sustainable.

"Any liquidity assistance can only be available if those with open-ended plans fix their liabilities."

"TPG believes that in spite of uncontrolled tuition increases, our education trust fund must equitably service all our education plans - both open-ended and fixed-value educational plans.

This is the foundation of our program," Colayco further said.

TPG said the program, which proposes a 15 percent cap on the average return on gross price for planholders, ensures equitable pay-out to both availing and non-availing plan holders.

TPG is likewise in the final stages of completing a program that calls for preserving the company’s trust fund and reserving a portion of planholders’ availment benefits as equity in the company.

"The STEP-UP program seeks to define the allocation of availment benefits based on the priorities and concerns of the scholars. At the end of the day, availment benefits may not be based on actual returns but rather a balance between both returns and liquidity," TPG said. Colayco said the non-cash portion of the redefined payouts will be in shares given to planholders who will be transformed into shareholders as the company restructures and make them majority owners.

With liabilities fixed, Colayco said the company will be able to declare operaitng income which will be rewarded back to planholders/shareholders in the form of dividends in some pre-determined time.

TPG is the sixth pre-need firm that was issued a show-cause order by the SEC for violation of the rules governing pre-need plans.