Menlo Capital to become top share holder of MRC Allied

MANILA, Philippines - Listed holding firm MRC Allied Inc. will convert as much as P1 billion in debts into equity for a major creditor as it prepares for its tourism venture in Cebu.

Investment house Menlo Capital will become the largest shareholder in MRC Allied following the debt-to-equity swap, the company told the local bourse.

MRC Allied said the board of directors approved late last year the debt-to-equity conversion of up to P1 billion worth of previously contracted debts, loans and other payables.

“The rationale of the transaction is that MRC Allied will significantly reduce its corporate liability as a result of the debt-to-equity conversion,” the company said.

Specifically, primary creditor Menlo Capital Corp. will take up as much as five billion common shares, allowing it to control 60.35 percent of MRC Allied from the current 12.2 percent.

Menlo Capital, formerly Pacific Asia Capital Corp., is owned by the Bitanga and Osmeña families, with Lucio Tan Jr. holding a minority stake.

“What we are thinking is to pay all debts through Menlo Capital and then convert [the debts to Menlo Capital] into equity,” MRC Allied president Benjamin M. Bitanga said in a phone interview.

As of end-September, MRC Allied had P1.05 billion in total liabilities, which includes bank loans and trade payables.

With debts out of the way, MRC Allied will focus on its property project in Cebu while mining projects are on hold as the government crafts new mining regulations particularly on revenue sharing.

“Our urgent project is in Cebu. Total project will cost more than P1 billion but we will do it in phases,” Bitanga said.

Bitanga said the first phase is a P150-million water park, which will be followed by a 100-room hotel.

In December, MRC Allied said it will start the first phase of a 160-hectare industrial estate in Cebu.

Cebu Technopark project is located within the Philippine Economic Zone Authority of the New Cebu Township One in Naga City, Cebu.