MPC officials attributed the heavy losses to a one-time, non-cash, extraordinary provision of P7.2 billion made during the first half of the year in an anticipation of a potential loss that may arise should foreclosures occur on its shares in Bonifacio Land Corp. (BLC), the private consortium developing the Bonifacio Global City.
"The provision reflects the difference between Metro Pacific’s carrying cost of its BLC shares and the amount of the principal of the outstanding loans that will be repaid by those shares, should foreclosure occur," MPC vice president for media and corporate communications David Nugent said.
Excluding the loan provision, MPC’s losses were slightly reduced to P1.5 billion from a P1.6-billion loss in the period last year. With the booked provision, this pushed up its total loss to P8.7 billion.
MPC owns 72.9 percent of BLC, with an equivalent book value of P14.8 billion. Currently, 50.4 percent of BLC shares are pledged as security for a $90 million loan from Larouge B.V., a wholly-owned Netherlands-based subsidiary of MPC’s Hong Kong-based parent company First Pacific Co. Ltd. and an additional 17.2 percent of BLC is pledged to other creditors whose loans are now past due.
Last June, the Gokongwei Group of taipan John Gokongwei Jr. offered to buy out the 50.4 percent BLC shares and 24.7 percent of telecommunications giant Philippine Long Distance Telephone Co. (PLDT) from FPCL in exchange for about $623 million. FPCL owns 80.6 percent of MPC.
But with the opposition and legal challenges posed by PLDT officials led by president Manuel Pangilinan, the Gokongwei group eventually backed out from further pursuing the negotiations when the deal’s exclusivity period lapsed last Sept. 30.
MPC said that while its consolidated revenues dropped 25 percent to P4.1 billion, this was offset by a 32 percent reduction in financing charges and operating expenses to P1.1 billion, mainly brought about by the discontinuance of interest accruals on MPC and BLC loans, for which settlement agreements have been obtained.
MPC is in the midst of a debt reduction and restructuring program with its creditors intended to alleviate its heavy debt load which, in 2001, caused the company to book losses of over P20 billion.