With only almost a year under a new management, the once ailing Negros Navigation Co. (Nenaco) is rising out of the ashes after it underwent rehabilitation.
Only this year, Nenaco underwent reforms and managed to reduce operating costs and recaptured critical business areas it used to contract out. Nenaco filed for corporate rehabilitation March 29 last year. The court approved the company’s rehabilitation plan last Oct. 5.
Before the rehabilitation plan, the shipping firm had a fleet of seven passenger and two cargo vessels, the receivers found the shipping company is still viable as a potent shipping company despite the fact that only four of them were working. They conducted studies on what really caused the second largest shipping firm’s near demise, and on how to improve its facilities and make good use of its existing assets so it can pay off its creditors.
Among the problems encountered by the past administration of Nenaco were severe liquidity problems and pressure created by mounting debts of P2.4 billion and the lack of working capital of P143 million to operate the ships and other services. The problem was compounded by continuing operating losses because most of its vessels were either non-operational or having poor servicing facilities which resulted in reduced passenger and poor cargo handling.
When the rehabilitation plan was implemented together with fresh cash infusion by the owners of P250 million, eight of the nine vessels became operational in the latter part of 2004 with the ninth commissioned last Feb. 1, 2005. With all the nine vessels running, the company is expected to turn around and hit its target by end of 2005.
Before the rehabilitation plan, Nenaco’s debts had hit P2.4 billion and the firm said its financial woes could be traced to a decline in passenger volume and the 1997 Asian financial crisis, which increased interest rates and operating costs. With the full utilization of its fleet and the restructuring of its debts, Nenaco hopes to significantly improve its revenues and and minimize its losses.
Under the plan agreed to by the court, the receiver can review, revise, award or cancel any contract entered into by the concessionaires with the previous Nenaco management in order for them to arrest the losses.
Despite the odds, the new management implemented drastic but efficient measures that involved streamlining of its operations, efficient hotel and housekeeping services, arrastre and cargo handling, consolidation of offices, and targetting good booking offices so that it can compete with leading shipping companies in the country.
Data culled from Nenaco reveal that since the start of operations in April 2004 to present, the reinvigorated shipping company managed to save a total of P122 million and regained its lost market matched by other revenue enhancement measures.
With a restructured debt, the new management managed to capture a one-time rehabilitation gain of P976.4 million.
Undeterred by criticisms hurled by some sectors, the new management went on with the 10-year rehabilitation plan amidst unfounded innuendos that will not take off.
Sulpicio Tagud Jr., prior to his appointment as rehabilitation receiver of Nenaco, was never connected with Metro Pacific. He however, represented the interests of ML&H Corp. in Bonifacio Land Corp., and Fort Bonifacio Development Corp., which is a consortium of 10 major real estate developers and financial institutions, including Metro Pacific. He is currently chairman and CEO of the company.
Nenaco has a court-approved rehabilitation plan that provides for the refleeting program, which entails the retirement/sale of some of its vessels and the purchase of new vessels as replacement. The move to sell the Princess of Negros is part and parcel of the refleeting program.
If a secured creditor has a lien on any of the Nenaco vessels which may be sold under the refleeting program, and the said creditor shall remain secured by the transfer of its lien to the replacement vessels that Nenaco will purchase under the said refleeting program.
The reporting by Nenaco of profit is based on its operations and not based on any sale of disposal of its capital assets. At the moment, Nenaco is merely preparing for the implementation of its refleeting program. It has neither sold any vessel nor reported profit on any sale of its vessels.
It is a wonder that despite the odds and clear economic future for the country, there is one good story we can hear with Nenaco’s rebirth and regaining of its old glory.
It also helps that career bankers Josie Tan and Andy Alcid are at the helm of the bank that prides itself as the only bank dedicated solely to the wealth management and asset management requirements of its clientele. With these respected bankers managing the bank, private banking clients can expect more non-traditional, structured solutions to be offered to them soon.
We can also credit this success story to the fact that the bank is now exerting effort to project a better image of itself to the public by simply looking better and classier. I got hold of its latest annual report–or is it the first ever–and it sure is unlike that of any other banks. It exudes class and distinction–things that are important to its "tres chic" clients.
Keeping its corporate headquarters in Ayala Avenue likewise sends the right signals to its clients that it is conforming to world-class private bank standards and expectations. I wouldn’t be surprised if the renovated office soon gets featured in prime design publications once it is completed.
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