Creditors Given 15 Days to Comment on Rehab Plan; SEC Task Force to Decide on PAL's Fate

Today

Wednesday, December 9, 1998

Lawrence Agcaoili

The Securities and Exchange Commission (SEC) has activated its three-member task force to analyze and decide in one month whether financially hammered Philippine Airlines Inc. can still be rehabilitated or he liquidated.

The SEC made the move as its hearing panel, chaired by officer-in-charge Fe Eloisa Gloria, gave the airline's more than 3,000 creditors 15 days to file their comments on the rehabilitation plan.

In a two-page order issued yesterday, Gloria said the task force which was assigned to analyze the rehabilitation plan submitted by PAL on Monday will have to submit its recommendation within 30 days.

“The SEC task force is herewith ordered to study, analyze the rehabilitation plan, and to submit to the hearing panel their requisite recommendation within 30 days from the date of this order,” Gloria said.

That means the task force will have until January 7 to submit its recommendations to the hearing panel.

The task force, created on June 19, is composed of SEC lawyers Manolito Soller and Rosita Guerrero, and Jesus Ulanday of the SEC's Examiners and Appraisers Department.

Apart from forming the hearing panel to handle the case, suspended SEC chairman Perfecto Yasay created the task force to validate the rehabilitation plan and determine if PAL's continued operation would serve the best interest of its stockholders, creditors and the country.

Yasay, who has been suspended by Ombudsman Aniano Desieno, was replaced by Gloria in the panel. The other panel members are SEC executive director Josefina Yasay-Paz and lawyer Ysobel Yasay Murillo.

PAL was forced to submit a stand-alone rehabilitation plan detailing its five-year recovery program after its talks with Cathay Pacific Airways of Hong Kong and Northwest Airlines of the United States bogged down.

In the plan, PAL said it still needs a foreign airline to infuse fresh equity to pay its $2.2-billion debt and its capital-intensive operations.

The rehabilitation plan included the proposed infusion of about $150 million by its present stockholders, led by beer and tobacco magnate Lucio Tan, and a major capital restructuring program which will dilute the shares of other shareholders, but raise the interest of Tan’s group.

As part of the capital restructuring, the airline wants to reduce the par value of its common shares to P0.01 a share from P.5 per share.

This means that the stake of the present shareholders like the employees will be reduced from 20 percent to 5 percent while that of government financial institutions will be cut to less than 1 percent from 15 percent.

The first trench amounting to $90 million will be infused after the approval of the rehabilitation plan. The second, covering $60 million, will he paid on the date of infusion, but not later than 180 days after the program is implemented.