CAP needs P7B to get back its dealership license

College Assurance Plan Phils. Inc. (CAP) would need to infuse P7 billion into its trust fund to get back its dealership license and avert the liquidation of its assets, a top official of the Securities and Exchange Commission (SEC) said over the weekend.

A high-ranking SEC official said that based on the estimates prepared by the Non-Traditional Securities Department, P7 billion would be enough to cover obligations of the pre-need firm for two years. The official, however, stressed that the cash infusion must be complemented by a business recovery program that should be faithfully complied with by the cash-strapped pre-need firm to ensure continued operations.

The SEC official said the recovery plan should detail the measures or planned courses of action to be taken by CAP to further strengthen its trust fund and the organization itself for the benefit of thousands of its planholders.

The same official said the commission remains firm in its position to not renew CAP’s dealership license unless it has secured the required capital to boost its depleting trust fund.

"I think that P7 billion would be an acceptable level for CAP to get back its dealership license," the SEC official said.

CAP is in the thick of negotiations with several groups of foreign investors, including a Hong Kong-based company for possible equity infusion. If things go as planned, CAP expects new funds to come in by September.

CAP first vice-president Bobby Café said the pre-need firm expects to receive $4 million a year over a period of five years from St. Augustine, a humanitarian foundation based in Europe. In exchange, CAP will issue a bank-to-bank authenticated message of an asset safekeeping receipt over its Metro Rail Transit (MRT) bonds.

At the end of five years, Café said the MRT bonds, which have a face value of $81 million, will revert to CAP.

CAP is also in talks with a Hong Kong-based firm for the infusion of fresh capital. The identity of the prospective foreign investor has been withheld pending completion of talks.

Café said the group is still hoping to forge a deal with Europe-based fund manager International Global Capital Holdings AG. Previous talks indicated that IGCH could infuse as much as P1 billion in fresh equity into CAP.

Apart from this, Café said the pre-need firm has revived talks with the North American marketing firm that earlier expressed interest to invest in CAP. The marketing firm, however, had indicated it would invest only when CAP has reacquired its dealership license.