Pacific Plans eyes fund to buy out fixed-value plans

Cash-strapped Pacific Plans Inc. is in talks with several financial institutions to explore the possibility of putting up a liquidity fund to buy out the fixed-value plans of its planholders.

"The liquidity fund we are trying to put up is another option for our planholders for ready cash. They don’t have to look around for a buyer because it will be a ready buyer," Pacific Plans said in a statement.

In a rehabilitation plan filed with the Makati Regional Trial Court, Pacific Plans has offered to return its planholders’ payments by issuing fixed-value plans, which can be encashed by July 2010 when the government bonds in the pre-need firm’s trust fund mature.

Planholders who opt to convert their open-ended plans to fixed value plans will earn upon maturity seven percent interest or roughly nine percent gross per year.

Pacific Plans said the fixed-value plans will be issued as soon as the Makati RTC approves the pre-need firm’s planned rehabilitation. The company, however, still has P341 million in funds for the current enrollment period.

The ailing pre-need firm has pegged a tuition support ceiling of P22,000 per semester for those enrolled in non-exclusive schools and P28,000 for exclusive schools.

Pacific Plans said tuition support will be treated as an advance against the fixed-value plan for planholders who are currently claiming benefits.

Scholars going to non-exclusive schools like the University of the East will get almost the equivalent of their last check from Pacific Plans.

Those going to exclusive schools like Ateneo de Manila University will get much less than their last check because exclusive schools charge at least twice as much as the non-exclusive schools.

The company also announced that on April 25 to 26, it will accept and process all claims for tuition support regardless of the assigned claim date.

Planholders are requested to proceed to Le Pavillon, Metropolitan Park, EDSA Extension corner Roxas Blvd. (beside Toyota Manila Bay) to claim their tuition support checks.

Pacific Plans said first-time availers can also file their application for their tuition support.

The company dropped all schedules for the release of checks after it transferred to Le Pavillon which is big enough to comfortably accommodate as many as 2,000 planholders a day.

Pacific Plans is in need for $300 million in fresh equity infusion to stay afloat pending the approval of its proposed rehabilitation plan.

To provide additional liquidity, Pacific Plans also plans to issue preferred convertible shares at 11 percent interest. These preferred shares shall be fully retired in five years.

As part of its rehabilitation plan, Pacific Plans likewise intends to seek renewal of its dealers’ license to allow it to offer education plans.

The new education plan shall pay the cost of tuition and other school fees at the time of need, subject to a pre-determined maximum education benefit per year.

The plan is payable in five years and will mature on the start of school year following the scholar’s stated birthday.