Benpres defaults on bond payments

Lopez-owned holding firm Benpres Holdings Corp. said yesterday it would renegotiate the terms of interest payments and principal repayments of its long term commercial papers (LTCPs) and Euronote issues following its failure to pay these charges on time.

Benpres corporate secretary Enrique Quiason told the Philippine Stock Exchange that the company was not able to make its interest payments on the LTCPs due last June 17 and will also default on the interest payments of its 7.875-percent Euronotes due yesterday.

He said in lieu of such interest payments and any other payments under the LTCPs and the Euronotes, the company "has recently made proposals in relation to interest payments and principal repayments in accordance with the terms of its Balance Sheet Management Plan."

As of end-2001, Benpres had P2 billion in outstanding LTCPs and the equivalent of P7.754-billion worth of five-year Euronotes, issued in 1997 and listed at the Luxembourg Stock Exchange.

Benpres earlier appointed the New York-based Credit Suisse First Boston as financial advisor in its Balance Sheet Management Plan.

The plan was hatched to address Benpres’ maturing financial obligations as well as restore its long-term financial health. This would require the reduction of debt, sale of non-core assets to raise cash and a moratorium on further investments and capital calls on its infrastructure projects.

Raymond Davis, CSFB managing director, said the company will seek the consent of its creditors for the restructuring of all liabilities (86 percent of which are dollar-denominated) as soon as the plan is presented to them this month.

Benpres has nearly $597 million (approximately P31 billion) in total debts (about a third or over $200 million falling due this year) and is thus hard-pressed to explore a number of options to unburden itself from debt and restore its long-term financial health.

Earlier, company officials identified the disposal of several assets that could generate about $200 million in fresh capital for the company. These assets include Benpres’ sake in non-listed firms First Philippine Infrastructure Development Corp., Beyond Cable Inc. and Rockwell Land.

In addition, the asset divestment could also involve part of its interest in First Generation Holdings, Corp., the group’s vehicle for its power generation businesses, after the sale of a 13 percent interest last year to two financial investors AIDEC and Sumitomo).

Similar transactions are also being contemplated in Benpres’ 59 percent subsidiary Maynilad Water and Manila North Tollways Corp., its joint venture with the Philippine National Construction Corp. (MNTC). Benpres could dispose of 10 percent of its equity holding in MNTC to another strategic investor before the tollways project breaks ground this July after six years of preparation.