MPIC subscribes to P600M worth of Makati Med convertible notes

Metro Pacific Investment Corp. (MPIC), the newly-incorporated debt-free investment holding company of First Pacific Co. Ltd., is subscribing to P600 million worth of convertible notes to be issued by the Makati Medical Center.

MPIC president Jose Ma. Lim said the investment will be made in April and is equivalent to a 33-percent stake in Makati Med.

Makati Med is issuing a total of P700 million worth of convertible notes. Taking the balance of the notes are the hospital’s existing shareholders which are exercising their pre-emptive rights.

The issue, once completed, will result in MPIC becoming the biggest shareholder of Makati Med. Makati Med is owned 10 percent by the Forres-Araneta family, five percent by the San Miguel Group, and the balance is held by its doctors. Total shareholders’ equity of Makati Med currently stands at P1.6 billion.

Proceeds from the convertible note issuance will be used by Makati Med to fund the establishment of a seven-story building that will house a diagnostics center and the improvement of its facilities.

Makati Med needs about P1 billion to P1.5 billion to fund working capital requirements. Saddled by its huge debt, Makati Med incurred P300 million in losses over the past three years. This, however, was never discovered until December 2004. The hospital allegedly had a faulty accounting system that made it look like it was earning.

Among the hospital’s creditors include the Development Bank of the Philippines, which has a P350-million exposure in the hospital, Rizal Commercial Banking Corp., Insular Savings, the Social Security System, and DEG of Germany, which has an exposure of an equivalent of P300 million in euros.

Under the loan restructuring program, Makati Med’s creditors have required an equity infusion as one of the pre-requisites for agreeing to restructure their respective loan exposures to the hospital.