CAP sees approval of its rehab plan by local court

College Assurance Plan Phils. Inc. (CAP) is confident of securing the local court’s approval of its proposed rehabilitation plan following the favorable rulings obtained by other cash-strapped pre-need firms.

"With the approval of the rehabilitation plans of Pacific and Platinum Plans, I don’t see any reason why CAP should be any different," CAP, director Robert John Sobrepena said.

CAP sought a moratorium on the payment of all obligations to planholders and creditors to give it enough breathing room to map out a viable and acceptable rehabilitation plan.

The move was also intended to prevent the Securities and Exchange Commission (SEC) from taking over management of CAP which could eventually lead to the pre-need firm’s extinction.

In its proposed rehabilitation plan, CAP is seeking a 10-year restructuring of its P2.9-billion loan obligations to creditors including Fil-Estate Management Inc., Philippine Veterans Bank, CAP Pension, and Pentacapital Investment Corp.

The initial payment is expected to commence not earlier than 2008.

Based on its audited financial statements as of end-December 2004, CAP has P14.6 million in cash and cash equivalents.

In contrast, CAP’s total liabilities which are now due and demandable amount to P4.1 billion, inclusive of its obligations to planholders, amounting to P1.2 billion. Of the total, P2.9 billion is owed to corporate creditors including Fil-Estate Management Inc. and Smart Share Investment Ltd. (P100 million), Bank of Commerce (P85.5 million), Philippine Veterans Bank (P18.5 million), Red Eagle Lending Investors (P27.2 million), and Fil-Estate Land (P5 million).

As of July 31, 2005, CAP’s trust fund is valued at P6.75 billion, P255 million of which or three percent is liquid.

CAP is seeking the appointment of former SEC chairman Perfecto Yasay Jr. as its rehabilitation receiver. CAP has also nominated former SEC associate commissioner Rodolfo Samarista and lawyer Jose Cedo for the post.

The pre-need firm has asked the court to set the initial hearing on the petition not earlier than 45 days but not later than 60 days from filing of the petition.

CAP projects a total trust fund build-up of about P13.56 billion by 2012 with the trust fund achieving a positive balance by 2010.

At the end of the implementation of the business plan, CAP expects a trust fund balance of about P9.115 billion with about P395 million in liquid assets.

CAP’s projections show that trust fund balances after 2012 will be positive and increasing from 2013 to 2025, with an ending positive balance of P20.96 billion with liquid assets of about P11.8 billion as of 2025.

Similarly, CAP expects a positive cash flow from 2005 to 2012 with an ending cash balance as of end-December 2012 of about P289 million. CAP’s capital deficiency will be reduced from P17.574 million to about P9.2 billion in 2012.