Filinvest Development Corp to buy P1.2-B convertible bonds of its subsidiary

Filinvest Development Corp. (FDC), the listed investment holding company of the Gotianun family, has entered into an agreement to buy the P1.2-billion convertible bonds issued by its subsidiary Filinvest Land Inc. (FLI) in 2002 from its existing bondholder.

FDC president Josephine Gotianun-Yap said the move is part of the company’s ongoing program to take advantage of the current liquid financial market to replace the existing debts of FDC and its subsidiaries with lower cost funds at longer maturities.

Recently, FDC obtained financing syndicated by First Metro Investment Corp. and prepaid its P1-billion loan from the Social Security System.

Overall, the refinancing program has reduced its borrowing rate by four to five percent per annum and has extended its maturities to better match its new projects’ timetables.

The consideration for the FLI bonds covers the principal, accrued interest and accumulated premium and will be paid through a combination of P1.3-billion in cash plus existing FLI shares owned by FDC.

FDC said the financing for the bond purchase will be provided by the loans it recently obtained from Insular Life and Sun Life of Canada.

FDC also announced that FLI has expressed its intention to negotiate for certain amendments to the bonds. In particular, FLI is seeking a reduction in total overall cost of the bonds and an extension of the maturity of the bonds from February 2007 to December 2010.

The new terms will allow FLI to allocate more funds for its expansion program plan over the next few years.

FLI has set aside P10 billion over the next five years for the development of new projects including Timberland Sports and Nature Club in Timberland Heights, Laeuna de Taal in Tagaytay, and the new Asenso Business Parks.

It also plans to develop a 12-hectare property in Mactan Island into a residential and leisure project.

FDC reported a 129-percent growth in net income in the nine months ending September this year to P383.7 million from only P167.4 million the previous year-period.

The increase was attributed to the improved performance of its property and financial services units.