US firm eyes assets foreclosed by housing agencies

A US-based company called Cerberus Plc., which earned its reputation for reviving financially-challenged corporations, is putting in a P10-billion fund to acquire and resell properties foreclosed by government housing institutions, particularly, the National Home Mortgage Finance Corp. (NHMFC), the National Housing Authority and the Pag-IBIG Fund.

At the same time, Cerberus is also going into a $500-million venture that essentially involves establishing a business recovery vehicle for ailing companies.

Finance Secretary Jose Isidro Camacho said the government signed two memoranda of understanding with Cerberus for the two separate ventures as part of the itinerary of President Arroyo’s recent official visit to the US.

"Cerberus is the second largest of its kind in the US. They intend to set up a fund able to monetize creditors. If successful, they could provide the right resources to make a difference and help the banks reduce their non-performing loans (NPLs)," Camacho said.

Camacho said government through the NHMFC, NHA and Pag-IBIG could participate in the $500-million venture, but the parameters have not yet been established.

"We could consider being a participant

although this is not a priority engagement and to stress, this is not a bailout for banks with exposure to home mortgages," Camacho said.

Camacho said Cerberus already started due diligence work on NHMFC, NHA and Pag-IBIG with a view to acquiring their respective housing projects and repackaging them to be sold to other interested investors.

"This is a money-making venture and will not be done to subsidize private investors," Camacho said.

Some P50 billion in home mortgages can be had at the NHMFC alone, Camacho said.

As a corporate restructuring company, Cerberus will do more than just buy bad loans.

Camacho did not go into details about the venture but said equity will be put into distressed companies if necessary to allow them to recover and become profitable again.

Aside from equity, the venture could also assign chief executive officers and chief operating officers from the Cerberus stable that can help local companies in their turnaround efforts, Camacho added.

Camacho said Cerberus’ proposed venture in the Philippines is timely as companies and banks are struggling to address their bad loans.

Cerberus is implementing similar operations in Japan and Korea and looking to expand to the Philippines. – Rocel Felix