Benpres trims debt to $330 million, seeks more restructuring deals

MANILA, Philippines - Benpres Holdings Corp., the listed investment holding firm of the Lopez family, has trimmed its debt to $330 million as of end-May this year and expects this to go down further as it continues to hold talks with creditors for loan restructuring, and buy back its debt.

At the company’s annual stockholders’ meeting yesterday, Benpres president and chief operating officer Angel S. Ong said some creditors have already agreed to a proposal to restructure payments over a period of 12 1/2 years instead of the original 18 years.

“We’re hoping to win approval of other creditors over time,” he said.

Another option is immediate cash settlement on a discounted basis.   He said the company has been able to buy back P501 million and $64 million of its debt at a 40-percent discount, allowing it to further reduce its debt to $330 million from $560 million in 2002.

Benpres chairman Oscar M. Lopez said the group’s sale of its stake in The Medical City and First Philippine Infrastructure Inc. helped the conglomerate pare down its debt.

Nearly a fourth of the original debt was incurred due to the failed operations of then water unit Maynilad Water Services Inc. In 2006, Maynilad was acquired by the joint venture of Metro Pacific Investments Corp. and DMCI Holdings Inc.

Lopez said the group’s sale of its significant holdings in power utility giant Manila Electric Co. (Meralco) was part of a major reassessment of its investment strategies that “had been made necessary by the economic and political environment.”

Given the disposition of some assets and partial settlement of debt, he said the group is in a much better position “to take on new challenges that would bring a new era to Benpres.”

“With the strong possibility that the prevailing economic crisis may soon ease, there will be plenty of opportunities that a newly focused and revitalized Lopez Group can take advantage of,” he said.

“For this reason, Benpres has chosen to focus on doing what it must to ensure that the future return of prosperity will find its operating units in perfect position to reap the fruits of current toil. Investments made must be shepherded to yield the desired gains for both customers and shareholders.

Lopez also explained that the divestment of the group’s stake in Meralco would strengthen the utility as a company and give it an opportunity to work for performance-based regulation (PBR) “without the political noise attendant to the Lopez Group’s participation in its business.”

A PBR would allow Meralco to adjust rates according to its performance both in system-wide operations and individual customer service.

Meanwhile, Ong said Benpres’ revenues are expected to increase this year from P22.31 billion in 2008, mainly coming from the conglomerate’s media and power generation businesses.

“With the expertise of PNOC-EDC in geothermal and steam technology, and First Gen’s track record in power asset management, investments in clean and renewable energy will lead to growth and leadership in this exciting field,” Ong said.

PNOC-EDC is majority owned by First Gen Power Corp., the power generation unit of the Lopez Group.

Lopez said their cable, telecom and property investments are also expected to perform better.

“Although we have not been able to provide financial support for the investments our operating units have been making, we continue to exercise our parenting function by providing enterprise-wide corporate services to improve overall performance through business excellence, social responsibility and other initiatives. All these are intended to enable each business unit to thrive in a competitive environment for the long haul,” he stressed.

“We are building companies to last well into a time perhaps only our grandchildren’s grandchildren will see. We want the gains on our investments to outlive us and benefit future generations, leading them always to a better way of life,” Lopez said.