MANILA, Philippines - The College Assurance Plans Inc. is in talks with a US-based hedge fund and a local group to sell its nine or 10 percent stake in Bank of Commerce as part of its fund-raising program aimed at meeting the company’s obligations to its planholders.
Sources said the two prospective investor groups are currently conducting a due diligence study on the medium-sized bank. The source refused to divulge the identities of the companies CAP is negotiating with.
Bank of Commerce is 51-percent owned by the San Miguel group through San Miguel Properties and SMC’s Retirement Fund, which previously invested a combined P2 billion in the bank.
Sources said CAP’s shareholdings in the bank represents one board seat.
When asked whether the conglomerate was interested in acquiring CAP’s shares, San Miguel president Ramon S. Ang said: “SMC will only buy new shares.”
CAP has been trying to unload its stake in Bank of Commerce since last year. Arctic Capital, a private equity fund owned by Australian gaming and media tycoon James Packer, withdrew its bid to acquire CAP’s at the height of the sub-prime crisis in the US and on fears that the bank had exposure to Lehman Brothers.
The aborted deal, which was already approved by the Monetary Board, would have allowed the CAP Group to raise around P1 billion in fresh funds.
The CAP Group comprises pre-need firm CAP, CAP Retirement and CAP Pension.
The sale forms part of CAP’s approved revised rehabilitation plan which calls for the disposal of non-core assets to pay benefits of planholders.
CAP filed for corporate rehabilitation in September 2005, nearly a year after it was prevented by the Securities and Exchange Commission (SEC) from selling new plans. At the time, the pre-need firm was having difficulty meeting obligations to planholders due to a depleted trust fund.
Bulk of planholders’ premium payments were invested by CAP into other businesses of the Sobrepenas, including real estate projects under the Fil-Estate brand and stakes in Camp John Hay Deelopment Corp. and MRT 3 Corp.
Prior to the filing of its petition for rehabilitation, CAP was able to graduate 80,000 college scholars, disbursing over P13 billion worth of plan benefits to various schools and universities nationwide.
There are currently over 100,000 enrollees being supported by CAP.