SEC nod not needed in CAP check payments

The Securities and Exchange Commission (SEC) said planholders of College Assurance Plan Phils. Inc. (CAP) no longer need to secure an endorsement from the corporate watchdog agency before getting their check payments from the cash-strapped pre-need firm.

The SEC issued this statement in light of reports that some planholders of CAP had been advised by the pre-need firm’s personnel to seek the endorsement first from the SEC to be able to receive their check payments.

SEC commission secretary Gerard Lukban pointed out that CAP’s disbursement activities is now out of the SEC’s hands after the company filed a petition for rehabilitation with the Makati Regional Trial Court last Sept. 1 owing to severe cashflow problems.

In its petition, CAP said it deserves another shot at getting rehabilitated as all it needs is a breathing spell to allow it come up with a viable recovery program.

CAP said it continues to pay its maturing obligations to planholders despite its present condition.

In the eight-year business plan filed with the court, CAP said its continued ability to meet its obligations is premised on the following assumptions: its dealership license is renewed, it secures additional equity infusion from foreign and local sources, and it streamlines operations by cutting costs.

CAP forecasts 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 also expects to achieve a positive cash flow from 2005 to 2012 with an ending cash balance as of December 2012 of about P289 million.

CAP said its capital deficiency will be reduced from P17.57 million to about P9.2 billion in 2012. Its trust fund presently has an asset value of P6.75 billion while the plan benefits to be paid from 2005 to 2012 amount to about P24.2 billion.

About P21 billion are benefits payable to holders of traditional open-ended plans (where the company guarantees the payment of tuition and other specified fees irrespective of cost at the time of availment) while about P2.5 billion are for the servicing of fixed-value plans.

Fixed-value plans are educational plans where the company’s liability is fixed and determined under the plans.

Based on the restructuring plan, CAP expects to secure $20 million equity infusion from St. Augustine Humanitarian Foundation over a five-year period starting in the last quarter of 2005. Another $100 million is expected in 2006.

Additional build up of the trust fund equity will come from accretion of discounts on MRT bonds. The discounts are expected to increase the value of the trust fund by P2.5 billion by 2012, CAP said.

CAP also expects to post a gain of about P214 million from the sale of shares in Bank of Commerce.

Moreover, CAP is banking on the projected cash inflow arising from the development/sale of its real estate properties which have an assessed value of P1.37 billion.

Among these properties include the Canyon Woods and Tagaytay Ridge, Nasugbu Properties, Manila Southwoods and Manila Southwoods Ecocentrum.

CAP is also seeking a 10-year restructuring of its loan obligations to its creditors including Fil-Estate Management, Inc., Philippine Veterans Bank, CAP Pension and Pentacapital Investment Corp.

CAP is hopeful 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 plan.