First Pacific okays deal between Metro Pacific, Ayala-Greenfield

Hong Kong-based First Pacific Co. Ltd. has finally approved a deal entered into by subsidiary Metro Pacific Corp. with the Ayala-Greenfield Development Corp. consortium for the assumption by the latter of a $90-million MPC loan in exchange for a 50.4-percent interest in Bonifacio Land Corp.

MPC currently holds a controlling 72.9- percent shareholding in BLC which in turn has a 55-percent interest in Fort Bonifacio Development Corp. (FBDC), which is a joint venture project with the Philippine government that commenced the redevelopment of a 157-hectare property known as the Bonifacio Global City.

First Pacific’s approval came following a favorable recommendation made by an independent board committee created by the former as to whether the terms of the transaction with the Ayala-Greenfield consortium are fair and reasonable as far as the independent shareholders are concerned.

"It basically means that First Pacific is now a party to the transaction which it has now approved after a due diligence review," MPC spokesperson Dave Nugent told The STAR.

According to First Pacific, it expects the whole transaction to be completed no later than April 2 of this year, following the completion of several other conditions-precedent such as execution of definitive implementing agreements, obtaining various consents and approvals from shareholders and government, among others.

It will be recalled that MPC entered into an agreement with Ayala Land and Greenfield which is owned by Jose Yap Campos of United Laboratories (Unilab) whereby the latter agreed to pay in cash $90million for the acquisition of an MPC loan owed to First Pacific subsidiary Larouge BV which is secured by controlling shares in Bonifacio Land.

MPC was unable to repay the Larouge loan when it finally became due and payable on Dec. 31, 2001. First Pacific, as a result of Larouge being a secured, creditor, had been co-managing with MPC the ongoing sale of MPC’s 72.9 percent controlling shareholding in BLC since Oct. 2001.

"On February 8, Larouge entered into the Larouge agreement with the Evergreen Holdings Inc. and Greenfield, which provides for the conditional sale and assignment of the Larouge loan and pledge to the EA group," First Pacific said.

Thus, under the Feb. 8 agreement, Larouge has assigned the principal loan of $90 million to Evergreen Holdings and Ayala Land (on a 50:50 ratio) with Greenfield as guarantor of the obligations of Evergreen. All amounts other than the principal which are payable to Larouge under the Larouge loan are excluded from the assignment and Larouge will become an unsecured creditor of MPC (where First Pacific has an 80.6 percent economic interest).

MPC will be transferring 50.4 percent of the outstanding common stock of BLC to the Evergreen-Ayala group as payment in kind for the Larouge loan.

According to First Pacific, the transaction would result in MPC’s direct interest in BLC declining to 22.5 percent from 72.9 percent, and First Pacific’s attributable interest being reduced to 18.1 percent from 58.8 percent.