PPI, planholders reach settlement

To avoid a long drawn-out battle, the management and planholders of Pacific Plans Inc. (PPI) announced yesterday that an amicable settlement has been reached in the dispute between the two parties, following the intervention of President Arroyo.

In a joint statement, the management of PPI and leaders of the Parent Enabling Parents (PEP) coalition said they have agreed to a negotiated settlement of planholders claims and hope to reach an acceptable and realizable payment plan within 15 to 30 days.

PEP president Philip Piccio said the breakthrough was made possible by President Arroyo who has expressed concern over the problems hounding the pre-need industry.

"The President has already addressed the problem of the industry. She even talked to us and communicated with us her concerns on this matter and we believe that she truly wants to see a peaceful end to this," Piccio said.

PPI president Ernest Garcia, for his part, said he believes the viable path now is to come up with an amicable settlement for the interest of investors and the pre-need industry.

Garcia expressed hope other pre-need companies experiencing the same problems as PPI would follow suit and unite for the good of the industry, which has been posting a decline in sales due to poor investor confidence. "It’s time for other pre-need companies to start embracing their planholders. There will be more consultations now with our planholders," Garcia said.

In their joint statement, PPI management and PEP said they have agreed to revisit the planholders’ entitlements, particular to PPI’s traditional educational offerings under the company’s proposed rehabilitation plan before the Makati Regional Trial Court, with the end-view of casting an alternative formula which shall be presented to the court for its consideration and approval.

"The alternative formula as agreed will essentially place the availing and non-availing planholders on equal footing in that entitlements for both availing and non-availing planholders shall be based on current value," the joint statement said.

More particularly, availing planholders shall receive an entitlement for unavailed years based on the tuition for school year 2005-2006.

Non-availing planholders, on the other hand, shall receive an entitlement based on the current average tuition per category of schools as of school year 2005-2006.

Piccio said the schedule of payments and the attendant instrumentation, once the entitlements have been determined, will be the subject of further study and negotiations as this would have to be accommodated by the orderly disposition of the covering assets under trust specific to these traditional educational plans and the operating performance of PPI during the rehabilitation period.

Garcia said PPI also intends to demonitize its $51.8-million worth of Napocor bonds which are guaranteed by the government.

Observers, however, said the money may not be enough to cover PPI’s obligations to its over 34,000 planholders.

Garcia is also hoping that if the court approves PPI’s rehabilitation plan, it will also initially provide a liquidity window of another P300 million to its traditional planholders.

He said PPI is now diligently working at providing the necessary liquidity for the October enrolment to extend tuition support for availing plandholders.

"This joint effort takes cognizance and appreciation of the problem besetting the pre-need industry with respect to open – ended educational plans and is directed at capping PPI’s liability under this type of plans with the kind help of its affected planholders," the joint statement stated.

"Further, this collaboration is seen to extend past the development of a constructive alternative formula and segue into a concerted effort to promote and support PPI’s business initiatives going forward in a true spirit of stakeholder partnership," they added.

The Securities and Exchange Commission is now reviewing whether it could allow PPI to assume the license of its now-defunct unit Lifetime Plans Inc.