SEC Orders Task Force to Review PAL Program

The Journal

Wednesday, December 9, 1998

The Securities and Exchange Commission (SEC) has ordered a commission task force to study the rehabilitation plan submitted by the cash-strapped Philippine Airlines last Monday and submit its recommendation within 30 days.

The task force was formed last June 19 to assist the hearing panel in the PAL proceedings.

It is composed of Jesus Ulanday, Monolito Soller, and Rosita Guerrero.

Ulanday is the chief in the Field Audit & Analysis division of the Examiners and Appraisers Department; Soller is a lawyer from the en banc division; and Guerrero, also a lawyer from the SICD.

The SEC also directed PAL interim rehabilitation receiver (IRR) to furnish a copy of the rehabilitation plan to both local and foreign creditors who were given 15 days to file their comments on the rehabilitation plan.

Of the local bank creditors of PAL, the Philippine National Bank (PNB) has the biggest exposure. Other local creditors are Allied Banking Corp; China Banking Corp; PCI Bank; RCBC; Equitable Bank; Union Bank; Security Bank; Westmont Bank; International Exchange Bank; Banco de Oro; Urban Bank; Land Bank of the Philippines; UCPB; GSIS; and Bureau of Treasury, P207.023 million.

Foreign creditors include Instituto De Credito Oficial thru National Development Co.; Banco Exterior de España; the US-based Chase Manhattan Bank and Chase Manhattan International Finance Ltd.; Nissho lwai Corp.; Hong Kong & Shanghai Banking Corp., $5 million; Banque National de Paris; Credit Lyonnais; and Kredietbank N.V.

At the same time, the SEC said "the order issued by the hearing panel in July 1, 1998 remains in force and binding, and the mandatory compliance by all persons concerned, whether natural and/or judicial, is hereby still reiterated."

That July 1, 1998 order refers to the suspension of payments of PAL.

PAL last Monday submitted to the SEC a rehabilitation plan, which calls for the injection of additional capital of $150 million by PAL shareholders as part of the financial restructuring plan for the airline.

PAL said the shareholder equity injection will be made in two trenches — $90 million to be paid following approval of the rehabilitation plan and or before the implementation date, and $60 million to be paid on a date to be agreed, but in any event, no later than 180 days following the implementation date.