PAL Recovery Faces Delay as Creditors Seek More Time to Review Rehab Plan

Philippine Daily Inquirer

Wednesday, December 30, 1998

By TINA ARCEO-DUMLAO

Business

THE RECOVERY of Philippine Airlines Inc. may be delayed as more creditors have asked the Securities and Exchange Commission for more time to submit their comments on the government’s rehabilitation plan for the cash-strapped flag carrier.

A syndicate of creditor banks under a $182-million loan and security agreement, through counsel Sycip, Salazar, Hernandez and Gatmaitan, said it would carefully study the plan before it could submit its comment.

The creditors asked the SEC for an additional 30 days, or until Jan. 24 next year, to submit its comment.

This group of creditors include Allied Banking Corp., Banco de Oro, China Banking Corp., Equitable Banking Corp., International Exchange Bank, Philippine National Bank, Rizal Commercial Banking Corp., Security Bank Corp., Union Bank of the Philippines and Westmont Bank.

Allied Bank, which represents seven commercial banks on a $60-million domestic syndication, also asked for more time to discuss the merits of the rehabilitation plan.

Allied Bank asked for an extension of five weeks from Dec. 23 or until the end of January next year to file its comment.

The SEC earlier directed the creditors to file their comments within 15 days from receipt of the order.

Only Credit Agricole IndosUez, Philippine Commercial International Bank and the Philippine National Bank were able to file their comments.

Pratt and Whitney Canada (SEA) Pte. Ltd. based in Singapore likewise asked for until Jan. 31 next year to submit its comment considering the huge volume of information contained in PAL’s rehabilitation plan.

PAL fuel supplier Mobil Philippines Inc., on the other hand, asked for 15 more days, or until Jan. 10, to file its comment.

The Airline Pilots Association of the Philippines, meanwhile, filed its comment on the rehabilitation plan. It expressed concern over a number of items, particularly on the fate of the airline’s employees.

Alpap said the plan was either “deliberately silent or no clear program at all for its employees.”

“The silence regarding their prospects betrays either a vacuity in concrete ideas in making the plan actually work or a foreboding of a scheme that is even more sinister than the suspension of the collective bargaining agreement,” Alpap said in its comment.

Alpap also raised concern over PAL’s plan to dispose of non-core assets such as catering, ground handling and maintenance.

“These departments may even be the ones that will ultimately make the differences between realized rehabilitation and eventual closure,” Alpap said.