CAP to issue $25M in preferred shares to foreign fund firm

College Assurance Plan Phils. Inc. (CAP) will issue preferred shares to a foreign fund manager that will invest $15 million to $25 million in the pre-need company.

This was relayed by CAP to top officials of the Securities and Exchange Commission (SEC) in a meeting last week.

SEC chairman Fe Barin said the Commission was assured by CAP that it was taking steps necessary to build up its trust fund and that it was just a matter of days before it could receive fresh capital from International Global Capital Holdings Inc. (IGHC) with whom the pre-need firm has a consulting agreement.

Under the agreement, IGHC shall help raise funds for CAP, which is in dire need of fresh capital to meet obligations to thousands of its planholders.

Based on the letter sent by IGCH to CAP, the proposed investment will come within 15 to 30 days from the issuance by the pre-need company of an asset safekeeping receipt .

According to CAP, IGCH will only need to receive a bank-to-bank authenticated message of an ASKR over CAP’s Metro Rail Transit bonds to serve as a confirmation that CAP has this much assets.

Without an ASKR, investment banks would have to conduct extensive due diligence on a company to determine asset valuations.

IGCH will tap HSBC Zurich as the disbursing bank for the proposed transaction.

Barin said it remains uncertain whether IGCH’s investment would entail a board seat. However, CAP said it could issue qualifying shares should the investor opt to secure a board seat.

The SEC chief said the Commission is not opposed to the proposed transaction as long as it will not establish any claim on CAP’s trust fund. "We hope they could do it fast because of the coming school year in June," Barin said.

IGCH is primarily involved in financial management and is registered in Vaduz, Liechtenstein. Its officers include Adriano di Palma, executive vice-president of Sao Paulo Bank; Stephano Persichella, vice-president of Sao Paulo Invest; and Giorgio Endrizzi, chief executive officer of Sofigen Trust.

IGCH is affiliated with all top 50 Western European banks, including Swissfirst Bank AG.

CAP First vice-president Bobby Café assured the public that the pre-need firm is committed to fulfilling all obligations to planholders.

Café said CAP is now completing all the requirements needed for the approval of its application for increase in capital stock now pending with the SEC. CAP is raising its capital to P8 billion.

The capital increase would reflect the infusion of a P6-billion property owned by businessman Romeo Roxas in CAP. CAP is transferring a 3,000 hectare property in Quezon, which will be developed into an educational center.

In exchange for the property infusion, Roxas will get one board seat in CAP.