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John Hay again fails to meet rental payment deadline

[ ] June 9, 2011

The Sobrepeña-owned Camp John Hay Development Corp. (CJHDevco) again failed to meet a new deadline on May 31 to pay P272 million in current lease payments to the Bases Conversion Development Authority (BCDA).

Dean J. Santiago, BCDA vice president for business development and operations, said the P272.183 million represents CJHDevco’s rents from December 2009 to March 31, 2011 based on the restructured memorandum of agreement (RMOA) forged on July 1, 2008.

Santiago said that by end of June 2011, CJHDevco’s arrears will have increased to P381.8 million, broken down into P309.68 million of rental dues from December 2009 to June 2011 and P72.18 million in interest on past due obligations.

The amount due on May 31 is on top of the P2.4 billion that CJHDevco owes BCDA as part of an earlier memorandum of agreement restructuring the lease payments.

The original amount acknowledged in that MOA was P2.686 billion but CJHDevco was able to pay in two installments of P280.34 million, paring down the debt to P2.4 billion.

Santiago also said CJHDevco has violated the security agreement it signed with BCDA for not establishing an escrow account.

He said CJHDevco is required to open an escrow account to serve as security for the full and timely payment of the principal and interest of their past and current rental obligations to BCDA.

Santiago said the security agreement required that 50 percent of actual common usage service assessment collections of CJHDevco be deposited in the escrow account reckoned upon the signing of the security agreement on July 1, 2008.

"CJHDevco has not, as provided for in the agreement, opened an escrow account nor has it deposited the amount as stipulated. This constitutes a violation of the security agreement and the RMOA signed in 2008,"

"We challenge CJHDevco to make the account public, if they did open one, so that everyone would see if they have complied with the lease agreement or not," Santiago said.

"We want to examine the account and see how CJHDevco arrived at the amount deposited based on their so-called ‘proportionate rentals corresponding to the developed areas in the John Hay special economic zone’," Santiago added.

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