Securities and Exchange Commission General Accountant Roberto Manabat said newly-appointed comptroller Mario Aguas will be tasked with ensuring that CAP covers its maturing obligations and contributes to a separate trust fund for new plan sales.
"CAP appointed Aguas as permanent comptroller in consultation with the SEC," Manabat said.
As comptroller, Aguas would determine whether CAP shareholders would have to raise additional money through a JSS (joint and several signatures) agreement.
CAP needs at least P2 billion to correct its trust fund defiency.
Several shareholders of CAP have offered to put up additional money to boost the beleaguered pre-need firm’s trust fund and to reassure planholders that CAP would meet all its obligations. They have agreed to guarantee the liabilities of CAP with their assets.
A trust fund serves as a buffer fund to ensure that all obligations due to planholders will be met in case a preneed plan firm runs into financial difficulty.
Apart from the Sobrepeña family, other shareholders of CAP include the Thomson family, Jose A.R. Bengzon III, Rockshed Management, Romulo Espadon, Rafael Evangelista, Coronado Munasque, Euron Realty, Ernesto Espaldon, and Melchor Morales, among others.
CAP, however, has stressed that it has paid all maturing obligations on time and has been constantly looking for ways to better serve the needs of its clients and maintain the reputation of reliability it has built through the years.
The company claimed that the deficiency incurred last year was caused by the Asian financial crisis which erupted in July 1997 and the consequent high cost of education in the country.
CAP earlier infused P100 million in fresh capital and P36.9 million worth of real estate properties to its trust fund. CAP president and chief executive officer Enrique Sobrepeña had said "trust fund shortfall" was not necessarily a "cash deficiency" but an "asset trust fund present value deficiency" based on certain assumptions to settle the company’s maturing obligations years from the date of the actuarial valuation report.
The actuarial valuation report determines the sufficiency of the trust fund vis-à-vis the reserve requirement or the benefit obligation of the company to the planholder when the plan matures or at the time of need as provided with plan.
In case of a trust fund deficiency, pre-need firms are required by the SEC to submit a trust fund enhancement program or a funding scheme to be studied and approved by the Commission.
CAP reiterated that it has paid more than P6.5 billion in tuition covering almost a hundred thousands students, of whom some 40,000 had finished college. – Zinnia dela Peña