SEC approves rehabilitation plan of ASB Group

The Securities and Exchange Commission has approved the rehabilitation plan of the debt-saddled ASB Group of Companies despite objections from secured creditors and the absence of Hong Kong "white knight" Chevalier International Holdings Ltd.

In an order dated April 26, the hearing panel led by SEC general counsel Eugenio Reyes said the approval of the plan will not deprive the secured creditors of their right to the mortgaged assets and that if the rehabilitation subsequently fails, the availment of their suspended rights over the assets will be restored.

The SEC said non-approval of the plan "will greatly prejudice the unsecured creditors who will be left unable to recover their investments or collect their claims."

The approval of ASB’s rehabilitation plan came just three days before the lapse of the SEC’s debt payment suspension order yesterday. The corporate regulator extended for the third time ASB’s debt relief in consideration of the reported entry of investment firm Chevalier Holdings through the infusion of fresh capital.

The ASB Group, controlled by businessman Luke Roxas, owes roughly P4 billion to about 700 unsecured creditors consisting of individuals, contractors and suppliers. It also has bank loans amounting to less than P4 billion, with Allied Bank, Metropolitan Bank and Trust Co., United Coconut Planters Bank, Equitable PCI Bank and Rizal Banking Commercial Banking Corp. as the major creditors.

The unsecured creditors have signified their support for the approval of the rehabilitation plan but the secured bank creditors have opposed the motion on several grounds, the more significant of which involve the plan’s viability. They are insisting that the ASB group has become insolvent and hence should be subject to liquidation.

Under the rehabilitation plan, the ASB group is proposing to reduce its debt by completing or selling ongoing projects; inviting secured creditors to complete dacion en pago or payment in kind transactions, waiving all penalties; and inviting unsecured creditors to purchase real estate parcels and other assets and set-off the amount of their outstanding claims against the purchase price.

The entry of Chevalier would have improved the chances of getting the secured creditors’ nod of the rehabilitation plan but the SEC said it has not heard anything from the Hong Kong-based "white knight."

Chevalier has reportedly agreed to infuse fresh equity into ASB and floated three possible options for the settlement of the company’s debts. These include a) the outright payment of 60 percent of total debts, hence a 40-percent discount; b) a 10-percent cash payment with the balance to be paid within 10 years, and c) payment in the form of condominiums developed by ASB.

The ASB group is the owner and developer of numerous real estate projects, mostly condominium projects of which 19 are completed and, four – the BSA Twin Tower, Garden Heights, the ASB Malayan Tower and Legaspi Place – are under various stages of construction.

At end-1999, ASB Holdings Inc., the group’s parent firm, had assets valued at P5.38 billion.

The SEC said a major consideration in approving the plan was balancing the interests between the secured and unsecured creditors. "In this manner, we agree with the argument of the individual creditors that we should consider the public interest aspect of this rehabilitation proceeding wherein there are about 725 individually-affected creditors with a total stake of P4 billion, more than the stake of the bank creditors.