Primetown Property gets debt relief; rehab plan readied

Primetown Property Group Inc. has secured a debt reprieve from the Makati Regional Trial Court, the publicly-listed real estate developer said in a disclosure to securities regulators.

The order thus provides Primetown relief from the payment of its outstanding liabilities as of July 2, 2003, the date of filing of the petition for rehabilitation.

The court order, however, does not cover payments and transactions done in the normal course of business such as settlement of administrative expenses including salaries and payments for goods and supplies.

At the same time, the Makati RTC appointed lawyer Ariel Salvador Magno as rehabilitation receiver for Primetown. A hearing has been set on Sept. 24 to discuss the proposed rehabilitation plan.

The court also ordered all creditors and interested parties, including the Securities and Exchange Commission, to file their comments or opposition to the petition with supporting affidavits and documents not later than 10 days before the date of the initial hearing.

The failure of any creditor or interested party to file comments or opposition to the petition will bar them from participating in the present proceedings, the Makati RTC said.

In seeking debt relief, Primetown blamed the Asian financial crisis, which resulted in high interest rates, the significant peso devaluation and the increasing cost of development and construction for its financial woes.

In earlier documents submitted to the SEC, Primetown said it will focus on a recapitalization program to build up its capital base and improve its liquidity.

The program involves inviting principal shareholders and prospective strategic investors to participate in the retirement and/or settlement of the company’s obligations to the banks and the buyers in uncompleted projects.

The purpose of this is to allow Primetown to start new projects and new businesses on a clean slate.

Primetown earlier forged an agreement with a third-party developer concerning the construction of The Meditel project, a condominium building in Mandaluyong City. Under the agreement, the building will be established in joint venture with the land owner and the Meditel buyers.

A similar program is being planned for the company’s Goldcoast project in Mactan, Cebu which should take care of up to P300 million of paid-in amounts owed to buyers.

To cut further losses, the company also plans to spin off its hotel operations and turn over the management of rental pool units to the association of unit-owners. The hotel operation has been incurring deficits for the last three years.

For the first quarter this year, Primetown’s losses decreased to P2.08 million from P3.1 million the same period a year ago. The loss, however, contributed to the ballooning capital deficiency, which has accumulated to P448 million from last year’s P446 million.

The company also attributed its losses to the lack of revenues to cover operating expenses as a result of the continued suspension of its projects since 1998.

Primetown has been able to sustain its operations by collecting receivables relating to its completed projects and liquiditating some of its assets. This quarter, the company was able to finance its working capital requirements through collections of installment receivables on sales.

Formed in May 1989, Primetown completed its first project in 1993 – the Century Citadel Inn Makati, the first condominium-hotel project in the country. It has completed another condotel project (Makati Prime Century Tower) and launched several residential and commercial development projects within the Makati Central Business District, Fort Bonifacio, Cebu City, Tagaytay City and Boracay Island.