CAP seeks 10-year restructuring of P2.9-B loans

Pre-need firm College Assurance Plan Phils. Inc. (CAP) is seeking a 10-year restructuring of its P2.9-billion loan obligations to creditors as part of its business recovery program submitted to the Makati Regional Trial Court.

CAP had sought relief from the Makati RTC for a moratorium on the payments of all obligations to planholders and creditors to give it enough breathing room to map out a viable and acceptable rehabilitation plan. The move was also intended to prevent the SEC (Securities and Exchange Commission) from taking over management of CAP, which the company said could eventually lead to its extinction.

In its petition, CAP said it will seek a restructuring of its obligations from creditors including Fil-Estate Management Inc., Philippine Veterans Bank, CAP Pension and Pentacapital Investment Corp. The proposals for restructuring shall include amortizing the loans over a period of not more than 10 years with the initial payment to commence not earlier than 2008.

Based on its audited financial statements as of end 2004, CAP only has P14.6 million in cash and cash equivalents.

In contrast, CAP’s total liabilities which are now due and demandable amount to P4.1billion, inclusive of its obligations to planholders estimated at P1.2 billion for the first semester of schoolyear 2005-2006.

Of the total, P2.9 billion is owed to corporate creditors including Fil-Estate Management Inc. and Smart Share Investment Ltd. (P100 million), Bank of Commerce (P85.5 million), Philippine Veterans Bank (P18.5 million), Red Eagle Eagle Lending Investors (P27.2 million), and Fil-Estate Land (P5 million).

As of July 31, 2005, CAP’s trust fund is valued at P6.75 billion, P255 million of which or three percent is liquid.

CAP is seeking the appointment of former SEC chairman Perfecto Yasay Jr. as rehabilitation receiver.

CAP has also nominated former SEC associate commissioner Rodolfo Samarista and lawyer Jose Cedo as rehabilitation receiver.

The pre-need firm has asked the court to set the initial hearing on the petition not earlier than 45 days but not later than 60 days from filing of the petition.

CAP projects a total trust fund build-up of about P13.56 billion by 2012 with the trust fund achieving a positive balance by 2010. At the end of the implementation of the business plan, CAP expects a trust fund balance of about P9.115 billion with about P395 million in liquid assets.

CAP’s projections show that trust fund balances after 2012 will be positive and increasing from 2013 to 2025, with an ending positive balance of P20.96 billion on liquid assets of about P11.8 billion as of 2025.

Similarly, CAP expects to achieve a positive cash flow from 2005 to 2012 with an ending cash balance as of end 2012 of about P289 million. CAP’s capital deficiency will be reduced from P17.574 million to about P9.2 billion in 2012.

CAP believes, however, that its current financial condition will change with the institution of some changes in its organization, policies, strategies, operations and finances, as set forth in its business.