Business World
Wednesday, December 30, 1998
Seven banks, led by Allied Banking Corp., have asked the Securities and Exchange Commission for five more weeks within which to submit their comments on the rehabilitation plan of Philippine Airlines, Inc. (PAL).
Allied Bank filed the motion on behalf of China Banking Corp., Philippine Commercial International Bank (PCIBank), International Exchange Bank (iBank), Rizal Commercial Banking Corp. (RCBC), Equitable Banking Corp. (EBC) and Philippine National Bank (PNB). They form the syndicate which extended a $60-million loan to PAL.
Allied Bank had only until Dec. 23 to file its comments on PAL’s rehabilitation plan. “Due, however, to the number of creditor banks which are members of the syndicate, there is a need for more time to convene and discuss the merits of the rehabilitation plan,” it said in its motion.
This is the second group of banks which asked for more time to file their comment on PAL’s rehabilitation plan.
The other day, 10 local banks, led by PNB, which extended a $182-million syndicated loan to PAL, made the same request. The group asked for a 30-day extension. Allied Bank is also part of the group along with China Bank, EBC, iBank and RCBC.
The other members of the PNB-led syndicate are Banco de Oro, Philippine International Exchange Bank, Security Bank Corp., Union Bank of the Philippines, and Westmont Bank.
The PNB-led syndicate asked for until Jan. 24, 1999 to file its comment, saying they need the added time to sift through “the huge volume of information contained in the rehabilitation plan which needs to be carefully studied.”
This was the same reason cited by two other PAL creditors – Mobil Philippines, Inc. and Pratt & Whitney Canada, Inc. – which also sought an extension of their deadline.
Thus far, only a handful of creditors has filed their comments on PAL’s rehabilitation plan.
On its own, PNB objected to key provisions of the plan, particularly the proposal to restructure PAL’s capital which involves reducing the par value of its existing common shares to only P0.01 from the current P5 per share, PNB said this “will substantially dilute” its stake in PAL.
In its proposed rehabilitation plan, PAL said the capital restructuring will reduce the holdings of PAL employees to 5% from the existing 20%.
PNB also criticized the pricing used by PAL, saying the “valuation is to low.”
To this end, the bank sought clarification how PAL’s interim rehabilitation receiver “arrived at the P0.01 valuation of the share.”
Another local bank which had balked at certain components of the rehabilitation plan is PCIBank.
PCIBank’s objection concerns the 15-year maturity period PAL wants to ask of its creditors concerning its loan. It instead proposed a maturity period of only 10 years, inclusive of the grace and repayment periods.
PCIBank also opposed PAL’s proposal for creditors to waive interest charges on all “post-petition” loans including default interest.
“The suggestion is open-ended, hence, would be too onerous for acceptance,” the bank said in a motion filed at the SEC. — Maricris C. Carlos
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