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Waterfront raises money to prevent foreclosure of hotels

Vol. XXII, No. 143-A [ BusinessWorld Online ]

Saturday, February 21, 2009 | MANILA, PHILIPPINES

GATCHALIAN-LED Waterfront Philippines, Inc. has raised the amount it needs to pay a loan from Philippine National Bank (PNB) and avoid the foreclosure of its two hotels in Cebu.

In a disclosure, Waterfront said it had obtained funding to pay its debt in full. The hotel operator did not say where it got the money.

Last year, Waterfront and the Lucio Tan bank agreed to amicably settle the dispute arising from the unpaid loan.

Under the agreement, Waterfront must pay the bank P40 million upon the execution of the deal. It must pay the balance of the principal loan, or P739.6 million, as well as unpaid interest, within three months, or by Feb. 19.

The P40 million is to be applied on the interest due, estimated to have reached P79.8 million as of Nov. 18.

Waterfront will also reimburse, within three months, PNB foreclosure expenses worth P19.15 million. If Waterfront fails to pay within the three-month period, it will be charged a penalty of P239.5 million and forfeit the right to object to foreclosure proceedings.

The agreement staved off foreclosure of the 562-room Waterfront Cebu City Hotel & Casino, the biggest in Cebu City and Waterfront’s flagship property, and the 167-room Waterfront Airport Hotel & Casino Mactan.

Waterfront and its subsidiaries, Waterfront Cebu City Casino Hotel, Inc. and Waterfront Mactan Casino Hotel, Inc., borrowed $30 million from PNB in 1997 to partly finance construction of the Cebu City hotel.

The loan has since been converted into pesos and restructured three times.

PNB demanded payment of the loan in October, several months after Waterfront failed to pay monthly amortization and interest charges of about P18 million.

Waterfront fought the foreclosure move and sought an injunction from a Cebu City court, arguing that it had paid around P1.2 billion — P400 million in principal and P800 million in interest as of 2007. — Kristine Jane R. Liu


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