BDO leasing unit unloads more assets

MANILA, Philippines — BDO Leasing and Finance Inc. (BDOLF) continued to unload it assets as part of the ongoing efforts to unwind its leasing and financing businesses and transform into a holding company.

In a disclosure to the Philippine Stock Exchange (PSE), BDOLF said it transferred 27.02 percent of its total assets to BDO Finance Corp. as part of the restructuring of the leasing business of BDO Unibank Inc.

Last January, BDO announced the restructuring of its leasing business via BDOLF to optimize the financial needs of clients in light of new accounting regulations covering lease transactions.

Lease transactions are less attractive option to corporate borrowers compared to the past as the International Financial Reporting Standards (IFRS 16), which took effect in January last year requires leases to be recognized on-balance sheet, similar to a loan facility.

BDO Finance would assume current lease transactions to provide continuity to existing clients. It would also assume current lease transactions booked in BDOLF to provide continuity to existing clients.

BDOLF transferred assets covered by the sale are mortgage receivables from credit transactions secured by real estate mortgage, and other receivables arising from other financing activities such as factored receivables, installment paper purchase and floor stock financing.

The value is equivalent to at least the book value or price on arms’ length basis. BDO Finance is considered an affiliate of BDOLF because of common shareholder, BDO.

BDOLF earlier sold 10 percent of its assets to BDO and BDO Finance to raise funds to retire some of its existing financial obligations.

Latest data showed total assets of BDOLF fell by 25 percent to P26.9 billion as of end June, mainly due to matured investments and sale of a portion of its lower yielding portfolio to mitigate the impact of the margin compression.

As of end- December, BDO controlled the publicly held leasing and finance firm with an 88 percent stake.

Last August, the Philippine Competition Commission already gave the Sy family the green light to divest its controlling stake in BDOLF to Victor Lim Jr. and Vittorio Lim.

BDOLF president Roberto Lapid earlier said it would soon surrender its primary certificate of authority as it intends to close five branches by the end of October.

“BDOLF is now in the process of winding its leasing and financing business and will surrender its primary certificate of authority” to operate as a financing company, Lapid said.