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Benpres Holdings selling Rockwell stake

Friday, June 12, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]

LOPEZ-LED holding company Benpres Holdings Corp. will proceed with the sale of its stake in property arm Rockwell Land Corp. this year to pare down debts.

"We are entertaining private placements from two interested parties. We hope to close it within the year," Benpres Holdings President Angel S. Ong said in an interview following a stockholders’ meeting.

The holding company wanted to divest its 24.5% stake in Rockwell Land, the book value of which stood at P1.7 billion, two years ago through an initial public offering (IPO). But Mr. Ong said an IPO is not realistic right now.

Aside from Benpres, other Rockwell Land owners are Manila Electric Co. (Meralco) with 51% and another Lopez holding firm, First Philippine Holdings Corp., with 24.5%.

"If ever we close the deal, we will use the proceeds to buy back our debts," he said.

The property developer’s 2008 profits grew by over a quarter to P603.19 million from P475.96 million in 2007. Meanwhile, revenues reached P3.51 billion, up from P3.47 billion in 2007.

Aside from Rockwell, Benpres Holdings might consider selling Bayan Telecommunications, Inc. at a "right price."

The Lopezes plan to sell a 24.5% stake in property developer Rockwell Land Corp. this year to reduce debt.

As of last month, Benpres Holdings’ total debt stood at $330 million, down from $360 million in December 2008.

Benpres Holdings is in a major debt restructuring and has been selling some of its major assets to trim down its obligations.

Last year, the company sold its 18% stake in The Medical City to an affiliate of private equity manager Lombard Asia for P600 million. On top of this, it also sold its 48% stake in First Philippine Infrastructure, Inc. to Pangilinan-led Metro Pacific Investments Corp. for P6 billion last year.

Mr. Ong told stockholders yesterday that the planned asset sale is in line with a debt restructuring proposal to creditors.

The Lopezes accumulated debt for investments in Bayan Telecommunications and Maynilad Water Services, Inc. The conglomerate returned the Maynilad Water concession to the government in 2005 amid mounting liabilities and difficulties in securing water rate increases.

"Debt restructuring with our creditors is continuing and in the absence of a definitive restructuring agreement, Benpres continues to make semiannual goodwill interest payments on its outstanding debts," Mr. Ong said.

To date, the holding firm has bought back $80 million in debts at a 40% discount, and structured $3.5 million worth of obligations.

Benpres Holdings wants to secure agreements with creditors to extend repayments by another 12.5 years.

"We continue to see value in maintaining a controlling interests in our core subsidiaries ABS-CBN Broadcasting Corp. and First Holdings which are excelling in their industries," Mr. Ong said.

Following the debt restructuring announcement, shares in Benpres Holdings rallied by 4.71% or P0.10 to P2.22 along with other Lopez stocks.

"Debt restructuring is a good sign. It has always been a perennial problem of Benpres — how to meet their funding — and whenever they get a fresh term, investors view this positively," Jun B. Calaycay of Accord Capital Equities Corp. said.

Benpres posted a net loss of P176 million from January to March, compared to a net income of P60 million in the first quarter of 2008 because of a 60% drop in contributions from First Holdings and foreign exchange losses. — Kristine Jane R. Liu

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