Metro Pacific suffers P20-B loss

Metro Pacific Corp. expects to suffer a consolidated net loss in excess of P20 billion in 2001, even as the company pursues a restructuring of its debts amounting to P12 billion.

The STAR learned that MPC officials are now in talks with various creditors for a debt restructuring program that will involve converting part of the debt into equity and seeking a longer repayment period. "But there is no debt suspension or moratorium in debt payments. We are paying part of the interest and actively talking with the creditors," sources said.

Official sources told The STAR that the whopping loss incurred last year, which will officially be announced towards the end of the week, is due mainly to impairment provisions which basically brought down the value of MPC shares to more realistic levels. "It is basically a desire on our part to clean our books," officials said.

They said that Metro Pacific has been carrying the same value of its shares for some time now, and it is but proper to finally bring them in line "with the given moment " to reflect market conditions.

A group led by Ed Tortoricci of First Pacific and Hong Kong and Agry Palisoc, who responsible for turning around Steniel Corp., are currently evaluating MPC’s financial options and are the ones in talks with the creditors, sources revealed.

Metro Pacific has debts amounting to P12 billion. Of this amount, P5 billion ($90 million) came from First Pacific subsidiary Larouge and MPC has already defaulted ion the payment of both part of the principal that has fallen due as well as on interest last Dec. 31. Larouge extended the loan only in April of last year to refinance Bonifaco Land Corp.’s convertible bonds. "It’s a basically a short-term facility from Larouge," officials said. The remaining P7 billion is owed to local institutional lenders and are peso-denominated loans.

MPC officials have expressed confidence that they can get the creditors to agree to restructuring the debt. "For certain creditors, they understand the value of the land and the investment and the long-term potential of the company," they said.

In order to improve the company’s financial standing, officials said the first step is to clean the company’s books as well to restructure debts.

Only P4 billion of the net loss is due to operations of MPC‘s individual business. MPC owns Bonifacio Land Corp. (BLC), Negros Navigation Co., First e-Bank, Landco, and the Pacific Plaza Towers. The STAR learned that BLC will announce a loss in 2001 while landco will post a net profit.

In 2000, the Metro Pacific conglomerate posted a P2 billion profit, mainly due to extraordinary gains.

Officials said that the move to bring down on purpose the value of its assets has the beneficial effect of clearing the books of Metro Pacific.

It will be recalled that parent company Fist Pacific Holdings wrote off of its investments in the Philippines recently, but MPC officials emphasized that the latter’s move was not dictated by its parent firm. "What we did for MPC was basically a paper write down," sources said.

Despite the move, MPC officials explained that the prices of land assets held by BLC have not been affected.

This is the reason why MPC has reportedly put on hold the sale of its controlling 69.9 percent stake in BLC, co-developer of Fort Bonifacio Global City. "Right now, the asset value is more than the debt," officials emphasized, adding that while the option to sell is still there, right now, there are not many buyers willing to pay a huge amount for a real estate-based company, MPC was selling BLC for $200 million.

The previous carrying cost of BLC shares was around P30 billion. The write down has cut this down by more than one-half. BLC has a 55 percent stake in Fort Bonifacio Development Corp., its joint venture with state-controlled Bases Conversion Development Authority.

BLC and FBDC have been trying to a develop a 150-hectare former military base in Taguig, Metro Manila into one of the country’s top commercial and financial districts but the development has been adversely affected by a property slump that started in 1997-1998.