All Asia stockholders rap IFC over rehab

Stockholders of the All AsiaCapital Group have accused the International Finance Corp. (IFC) of standing in the way of the group’s rehabilitation.

In a press briefing yesterday, All AsiaCapital vice chairman Eusebio H. Tanco said the only way to save the group is to infuse additional capital.

However, the IFC rejected the plan as this will dilute its seven-percent equity in the group.

Tanco explained that by infusing capital, the different companies belonging to the group can become economically viable either for further operation or for sale.

"We do not understand why the (IFC) is stopping us from rehabilitating the firm. Without the capital infusion, the company will fail and would be a candidate for liquidation. Then IFC and all the stockholders will have to wait in line to get their investment," Tanco said.

However, the stockholders will be violating the anti-dilution clause in an agreement with the IFC which mortgaged nearly 80 percent of the retail subsidiaries of All AsiaCapital.

Aside from financing, All Asia is into life insurance, pension, pre-need, mutual funds, trust funds, and asset management.

"We are in a bind under the mortgage agreement which has the anti-dilution clause. "We can not infuse new capital and we can not bring in new investors," said All AsiaCapital chairman Nicasio L. Alcantara.

Alcantara says the problem of All Asia can not be solved unless the stockholders and the IFC come to an agreement.

Among the options open to them is that the anti-dilution clause be terminated, thus allowing for major capital infusion into the company. However, there must be a way so that the stake of IFC will not be diluted.

IFC had tried to sell the pledged assets of All Asia Life Assurance Corp. but the results were negative. The life insurance arm is one of the profit centers of the group although it has been growing by a mere six to seven percent per annum.

Tanco admitted that no one would be foolish enough to buy All AsiaCapital until it is completely rehabilitated. Likewise, no financial institution would be foolish enough to extend equity loans to the troubled firm.

AllAsia Capital has been in default from its loans with IFC amounting to over P800 million since last year. AllAsia had offered to buyback the seven percent equity of IFC in order to have greater flexibility in its rehabilitation program.

The IFC, the investment arm of the World Bank, is both a stockholder creditor of the AllAsia Group of Companies.