MPC suffers P457-M loss

Metro Pacific Corp. incurred a net loss of P456.57 million in the first half of the year, a reversal from the P90.89-million net profit reported in the same period a year earlier, largely due to provisions for debt-saddled shipping unit Negros Navigation Co. (Nenaco) and a one-time charge for a real estate investment.

Metro Pacific, the Philippine flagship of First Pacific Co. Ltd. of Hong Kong, said in a financial report submitted to securities regulators that it made a provision of P139 million against an unprofitable Nenaco vessel, and a separate provision of P258.5 million against a real estate investment of an affiliate in San Juan, Batangas.

Metro Pacific registered consolidated revenues of P1.35 billion for the first six months of 2006, 20.12 percent lower than the previous level’s P1.69 billion owing to higher operating expenses.

Consolidated operating expenses, on the other hand, jumped 86.84 percent to P192.7 million from P176.8 million a year earlier. Financing charges likewise increased to P117.2 million compared with P108.7 million, due to higher interest charges incurred by Nenaco.

Metro Pacific said the results also included the performance of unit Landco Pacific Corp. until end-April, when its entire shareholding in the leisure property development firm was sold to Metro Pacific Investments Corp. (MPIC).

"Our results today reflect our resolve in making the hard choices required to complete Metro Pacific’s workout and which will enable the new and debt-free MPIC to emerge with a strong financial foundation," said Metro Pacific president and chief executive officer Jose Ma. K. Lim.

Under Metro Pacific’s reorganization and recapitalization plan announced in March, MPIC is to make a tender offer to existing minority shareholders of Metro Pacific, to enable those shareholders to migrate to the new debt-free MPIC.

Following the provisions made, Metro Pacific’s net asset value is expected to amount to approximately P238.2 million or 25 centavos per share.

Under the planned exchange ratio, four Metro Pacific’s outstanding shares could be exchanged for one new MPIC share. In addition, MPIC will offer three warrants for every four Metro Pacific shares to be tendered by minority shareholders.

Each warrant will entitle the shareholder to subscribe for its equivalent one common share for MPIC at par value.

Detailed terms and conditions for the tender offer will be announced by MPIC next month. MPIC will be listed on the stock exchange after the reorganization, replacing Metro Pacific.

Given the present overcapacity in the domestic shipping industry and the continued rise in fuel costs, Metro Pacific is reviewing a number of strategic options with respect to its investment in Nenaco.

To ensure long-term growth, Metro Paci-fic is also considering investing in the infrastructure, power generation and consumer foods businesses.