The Manila Times
Thursday, December 24, 1998
BELEAGUERED Philippine Airlines Inc. (PAL) said yesterday it will plead with creditors, many of whom have rejected its rehabilitation plan, to give the company a shot at survival.
“Most (creditors) are not accepting the plan but we will be talking to them,” Chief Financial Officer Jaime Bautista told reporters.
“We are confident that we will be able to agree on terms that will make this rehabilitation plan successful,” he added.
Bautista and lawyers of the 57-year-old PAL yesterday detailed the firm’s survival plan to a Securities and Exchange Commission (SEC) technical panel evaluating its viability.
PAL, Asia’s oldest Airline, submitted a rehabilitation plan to the SEC on Dec. 7, saying it needed $150 million in fresh equity, debt restructuring and to slash routes and aircraft.
But many of the thousands of creditors of PAL have rejected the survival plan.
The European Export Credit Agencies (ECAs), through French bank Credit Agricole Indosuez, rejected the draft rehabilitation plan of PAL on the grounds it did not address two key issues – the presence of a strategic partner and infusion of $200 million in new equity.
Credit Agricole acts as the security trustee and assignee of lessors’ rights in leases of 12 Airbus planes to PAL supported by the ECAs. The number of leases constitutes more than half of the 22 planes PAL would continue flying under its survival plan.
Other creditors of PAL also raised concerns on the payment terms of their concerns on the payment terms of their loans. Philippine Commercial International Bank said in a filing to the SEC that if PAL reduces its fleet, it should sell some of its surplus spare parts to raise cash to pay some of its domestic loans.
It also asked that the PAL limit the maturity of both its secured and partially secured “claims,” or outstanding payments, to 10 years. – Reuters
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