SEC mulls new committee to monitor CAP finances

The Securities and Exchange Commission (SEC) is considering appointing a new committee that will monitor the financial condition of leading pre-need industry player College Assurance Plan Phils. Inc. (CAP).

At present, there is only one person overseeing CAP’s trust fund build-up since the two other persons that were part of an oversight committee created by the SEC early this year had decided to take on other jobs or responsibilities.

The oversight committee shall make sure that CAP maintains low operating expenses and properly contributes to its trust fund.

It is also tasked with evaluating the effectiveness of the pre-need firm’s investment program to ensure greater returns.

CAP earlier requested that composition of the oversight committee be made up of people from the pre-need industry or the private sector.

The SEC has deferred action on CAP’s request for renewal of its license as the pre-need firm sought a one-month extension for it to comply with all the requirements, including the infusion of the needed capital to further beef up its trust fund.

According to the SEC, it is now up to CAP to speed up compliance with all the requirements since it can no longer sell securities to the public because its dealership license expired last Sept. 30.

The capital infusion is part of the SEC-approved asset build-up program that CAP is undertaking to match the anticipated deficiency in its trust fund with the growth of its assets.

The subscription agreement between CAP and businessman lawyer Romeo Roxas’ Greensquare Property involves the transfer of the latter’s real estate properties valued at P6 billion to the pre-need firm.

The properties which will be infused into CAP’s trust fund, will be developed by CAP into an educational center.

As regards its proposed transaction with the foreign investor, CAP is expected to secure a $127-million loan which will be used to buy assets used as collaterals for its trust fund like the Metro Rail Transit bonds and other real estate properties.

The bonds are zero-coupon notes issued by MRT III Funding Corp. with an aggregate present value of $50.7 million and maturing at various dates starting 2003 to 2005.

The bonds, acquired in 2002 from Fil-Estate Management Inc., have a future value of approximately $195 million. The liquefication of P7.1-billion worth of properties and assets from the trust fund is expected to make CAP debt-free.

Apart from this, the foreign fund manager is expected to infuse $100 million in fresh equity into CAP.

In exchange for the property infusion, the local property firm would be entitled to one board seat in CAP. The foreign investor, on the other hand, will get four board seats.

With all this in place, CAP’s trust fund is expected to grow by as much as P18 billion which should help address its financial difficulties and cover the projected P17.2-billion shortfall in its trust fund.

CAP has trust fund assets of P8.49 billion, of which P3.12 billion are invested in the MRT bonds, P2.67 billion in real estate properties, P2.26 billion in shares of stock of listed companies and subsidiaries, P83.83 million in treasury bills, P134.92 million in advances to Nasugbu Properties and P143.06 million in loans to other firms.