MANILA, Philippines - From a high of $560 million in 2002, Benpres Holdings Corp., the listed investment holding firm of the Lopez family, has trimmed its debt to only $70 million after buying back $260 million in principal debt from its biggest creditor, making a breakthrough in a long-drawn-out debt restructuring effort.
In a disclosure to the Philippine Stock Exchange yesterday, Benpres said it paid $169 million for the buyback of principal debt from Avenue Asia Group at a 35-percent discount, using proceeds from the sale of its shares in First Philippine Infrastructure Inc. Rockwell Land Corp. and Digital Telecommunications Philippines Inc.
Benpres president and chief operating officer Angel S. Ong said the buyback is in line with the group’s balance sheet management plan to pare down debt which now stands at $49 million and P893 million.
Ong said the buyback removes much of the uncertainty that has shadowed Benpres and its associated companies for the past several years.
“The debt restructuring exercise has previously affected the ability of our subsidiaries to raise funding for their own growth strategies. With our debt remaining at a manageable level of $70 million, we can all look forward to operating under normal conditions,” Ong said.
He said the company’s standing offer with its creditors for the settlement of its remaining debts under mutually acceptable terms, remains in place.
“The remaining creditors have the option to either sell debt back to the company, subject to discount and funds availability, or sign a new loan agreement for a bullet payment after 12.5 years. This has been a standing offer since December 2008, and a number of creditors have, in fact, already signed up and availed of the plan,” Ong said.
Benpres was hit hard by the Asian financial crisis in 1997 that devalued the peso from 26 to more than 50 against the dollar. Saddled with huge debt and failed investments, Benpres was forced to exit from Maynilad Water Services Inc. in 2005.
In 2008, Benpres sold its 18-percent stake in The Medical City to an affiliate of Lombard Asia.
Given its financial burden, the Lopez family likewise sold most of its stake in the country’s largest power retailer, Manila Electric Co., to Hong Kong-based conglomerate First Pacific Co. Ltd.
Benpres is the parent firm of media conglomerate ABS-CBN Broadcasting Corp. and First Philippine Holdings Corporation (FPHC), a holding company with investments in power generation, power distribution and manufacturing.
Shares of Benpres closed 1.4 percent higher yesterday at P3.65 with a total of 34.77 million shares changing hands valued at P127.62 million
Benpres posted a net income of P475 million in the first half this year, a reversal of the P647-million loss incurred the previous year-period. Unaudited consolidated revenues rose 14 percent to P11.69 billion from P10.25 billion on higher contributions from ABS-CBN, FPHC and contained expenses as well.
Equity in net earnings of investees grew four-fold to P474 million from only P117 million as FPHC swung back to profitability with net earnings hitting P896 million compared with a net loss of P230 million. The turnaround in FPHC’s financial performance was driven by the increase in net income of power utility giant Manila Electric Co. and low foreign exchange losses.
ABS-CBN, meanwhile, chalked in a net income of P813 million, up eight percent from P754 million as consolidated revenues grew 14 percent to P11.7 billion from P10.2 billion. Airtime revenues amounted to P6.7 billion or six percent higher than the previous year while direct sales increased 28 percent to P5 billion following the consolidation of cable channel operator SkyCable.