Universal Rightfield waives right of first refusal on Monarca Greenworld Corp

Debt-ridden Universal Rightfield Property Holdings Inc. (URPHI) has waived its right of first refusal for Itochu Corp.’s three million common shares in Monarca Greenworld Corp.

URPHI, which has a 35 percent interest in Monarca, said it was not interested in buying pro-rata shares as it is currently undergoing rehabilitation.

"The waiver should not, however, be construed to be a waiver to purchase the said shares should you, hereafter, vary the purchase price or re-offer the shares under different terms and conditions as those stated in the offer," URPHI said in a disclosure to the Philippine Stock Exchange.

Recently, a Mandaluyong City regional trial court approved creditor DM Consunji’s petition to rehabilitate URPHI with a stay order on the enforcement of all claims against the company.

The court order prohibits URPHI from selling its properties and making any payment of its outstanding liabilities, which currently stand at P1.4 billion.

Of the total liabilities to banks, contractors and others, DMCI holds P480.5 million as of end-September 2003 which are currently due for payment.

DMCI said it decided to file the petition to register its liabilities as a contractor of services and materials and ensure that it will be paid by URPHI under a court-appointed rehabilitation receiver in accordance with past and previous attempts by DMCI to collect payments.

DMCI said the appointment of a rehabilitation receiver will facilitate the implementation of an equitable and commercially viable restructuring of the financial indebtedness that returns URPHI to financial health and provides it with the certainty necessary to continue its business effectively and profitably.

The proposed rehabilitation plan submitted by DMCI involves the reduction of debt through dacion en pago and an initial infusion of P150 million to jumpstart development costs of URPHI’s property in Cabuyao, Laguna.

The dacion en pago scheme, according to DMCI, will lessen the pressure for debt servicing by developing real property currently in the landbank of URPHI into value-added properties, including joint venture undertakings with third party developers/financiers and recapitalization.

The analysis of URPHI’s cashflow projections carried out by DMCI’s financial advisers shows that the cash-strapped firm may be able to repay its debt over a period of 10 years.

DMCI’s financial advisers noted that URPHI’s core business of residential and leisure development in 1996 was promising but the principal difficulties it experienced stemmed from the expansion in terms of landbanking during the start of the Asian financial crisis in 1997.

Nevertheless, DMCI’s financial advisers believe that the property market will rebound and URPHI capitalizing on the property of its wholly-owned subsidiaries Universal Leisure Corp., Orizontas Property Management Corp. and Manuel Development Corp. has a potentially viable and substantial business which can and should be returned to financial health by the implementation of the rehabilitation plan.