Lopez Holdings takes steps to clean up balance sheet

MANILA, Philippines - Lopez Holdings Corp. (formerly Benpres Holdings Corp.) will undertake a quasi-reorganization to clean up its balance sheet .

The listed investment holding firm of the Lopez family said its board authorized the filing of an application for quasi-reorganization with the Securities and Exchange Commission.

Under the planned quasi-reorganization, the company’s additional paid-in capital as of Dec. 31, 2009 amounting to P6.765 billion will be applied against accumulated losses in the same amount.

Lopez Holdings continues to hold talks with creditors to further pare down debt. It earlier forged an agreement with Union Bank of the Philippines for the restructuring of $19.93-million Eurobonds. This would result in the reduction of the company’s remaining obligations to $25 million and P875 million.

The primary financial terms of the settlement include a bullet repayment of the principal amount 12.5 years from the effective date at a fixed interest rate of four percent per annum gross of final tax.

The conglomerate’s priorities are to wipe out its deficiency so it can be in a position to declare dividends next year.

Lopez Holdings has significantly trimmed its debt from a high of $560 million in 2002, when it declared a debt standstill, to P3 billion as of end-June this year. The sale of key assets made it possible for the company to significantly reduce its debt.

The Lopez clan has sold its water distribution (Maynilad Water Services Inc.) and toll roads (First Philippine Infrastructure Inc.) businesses as well as most of its stake in the country’s largest power retailer, Manila Electric Co., to the First Pacific Co. Ltd. of Hong Kong led by Manuel V. Pangilinan.

In 2008, it also sold its 18-percent stake in The Medical City to an affiliate of Lombard Asia.

In the first half this year, Lopez Holdings posted net earnings of P11.38 billion or almost 24 times the P475 million recorded in the same period a year ago on the divestment by subsidiary First Philippine Holdings Corp. of its 6.7-percent stake in Meralco.

Lopez Holdings remains confident it would sustain its positive operating performance for the rest of the year given higher contributions from main units FPHC and ABS-CBN Broadkasting Corp.