SEC rules out closure of CAP

The Securities and Exchange Commission (SEC) said a proposal to close down College Assurance Plan Phils. Inc. (CAP) would do more harm than good to the pre-need firm’s investors.

"If we close it (CAP), planholders would be at the losing end. What good would it do? At the end of the day, planholders would still have no money to pay tuition fees," SEC chairperson Fe Barin told reporters.

Barin said she is hoping that CAP could speed up its compliance with the remaining requirements for the renewal of its dealership license. The SEC, however, has not set any deadline for CAP’s compliance since it has no more securities to sell to the public.

"We keep on pressing upon them the urgency of the situation but I don’t think they need us to tell them that. With more people going to their office, I’m sure they would speed up compliance," Barin said.

Barin said the SEC wants to ensure that the needed funds are infused into CAP prior to renewing its dealership license. "We see no basis for us to issue a new dealership license to CAP unless we see new money. Show us the money," she said.

CAP, meanwhile, has assured its planholders that it would not default in its obligations and is doing everything it can to further strengthen its trust fund.

CAP filed last Monday an application for increase in its capital stock from P300 million to P8 billion. The new capital will be paid by way of infusion of real estate properties owned by the group led by businessman-lawyer Romeo Roxas. The transfer involves 2,900 hectares of land in Quezon province valued at P6 billion per the valuation of an SEC-accredited appraiser.

CAP said the land titles submitted are already free of any liens, encumbrance or annotations.

The pre-need firm recently signed a loan agreement with California-based First American Investments Ltd. and trustee bank Philippine Veterans Bank wherein CAP would be able to convert to cash some of its trust fund assets by way of a loan package amounting to $300 million. Proceeds from the loan would be used to pay off its planholders.

To put an end to its liquidity problem, CAP has also urged the SEC to find a more effective way of computing the actuarial reserve liability (ARL). CAP earlier questioned the present procedure in computing trust fund liability by classifying a prediction of a future liability as an actual liability in financial reports.