SEC clears P5-B bond of Rockwell Land

Posted on October 31, 2013 10:25:50 PM [ BusinessWorld Online ]

THE SECURITIES and Exchange Commission (SEC) has approved the planned P5-billion bond issue of Rockwell Land Corp., an official of the regulator said yesterday.

SEC Secretary Gerard M. Lukban, in a text message, confirmed that the commission en banc gave its approval on Wednesday.

The bonds will have seven-year maturity, while coupon rate will be based on the interpolated 7.25-year Philippine Dealing System Treasury-Fixing Benchmark rate.

Rockwell Land last month said proceeds of the bond offering will be used to help bankroll Proscenium, a P26-billion mixed-use project at Rockwell Center in Makati City which features five towers. Construction of the first three towers started early this year. The transaction’s issue manager will be First Metro Investment Corp., which together with SB Capital and Investment Corp., will act as joint lead underwriters.

Local debt watcher Credit Ratings and Investors Services Philippines, Inc. has assigned ‘AA+’ issuer rating on Rockwell Land, reflecting the borrowers’ “very strong capacity to repay debt with a low probability of default and a high recovery rate in a worst case scenario.”

A number of firms have tapped the debt market this year, and more a scheduled to follow.

GT Capital Holdings, Inc. in the February issued P10-billion fixed-rate bonds.

Ayala Land, Inc. early this year issued P21 billion worth of fixed-rate bonds -- P15 billion in July and P6 billion last month.

Meanwhile, Aboitiz Equity Ventures, Inc. plans to sell P10 billion worth of retail bonds next month.

Manila Electric Co and Filinvest Land, Inc. are also looking to sell P20-billion and P7-billion worth of bonds, respectively, in the fourth quarter.

Rockwell Land’s net income increased 25.57% to P555 million in the first half from P442 million in the same six months last year.

This as revenues climbed 25.58% to P3.24 billion from P2.58 billion, while expenses increased 24.75% to P2.47 billion from P1.98 billion.

Shares of Rockwell Land added two centavos or 1.04% to settle at P1.94 apiece yesterday from P1.92 each on Wednesday. -- C. H. C. Venzon         

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Home Guaranty bankrupt

October 31, 2013 11:13 pm [ manilatimes.net ]

by JOHN CONSTANTINE G. CORDON

REPORTER

AFTER 11 years of “continuous losses,” the financial resources of the Home Guaranty Corp. (HGC) have been depleted and the agency now risks losing the capacity to provide guarantees for housing loans, according to the Commission on Audit (COA).

The HGC’s “losing streak” prompted COA to sound the alarm after discovering during its audit conducted in 2012 that the government-owned and –controlled corporation (GOCC) has racked up a deficit of P13.296 billion.

Government auditors said that for the last 11 years, HGC’s performance was “underwhelming” because of its previous defaults on its guaranteed mortgages.

“[This] resulted in accumulated deficit of P13.296 billion as at December 31, 2012, thereby further depleting HGC’s financial resources that diminishes its capability to provide guarantee for loans supporting a viable shelter program,” the audit report noted.

Auditors said that the accumulation of losses over time reduced the retained earnings of the company “to a negative balance.”

The HGC provides risk coverage or guarantees and tax/fiscal incentives to banks and financial institutions granting housing development loans and home financing.

It performs its mandate by working closely with the Department of Finance, Housing and Urban Development Coordinating Council, the National Economic and Development Authority and with other government housing agencies such as the National Home Mortgage Finance Corporation, Home Development Mutual Fund or Pag-ibig, Social Housing Finance Corporation, Housing and Land Use Regulatory Board and the National Housing Authority.

State auditors said that the P2 billion loss, including the “comprehensive loss” of P575 million incurred in 2012, has seriously affected the financial condition of HGC.

The audit agency said that the GOCC started its losing streak in 2002. It said that except for years 2007 and 2009, the HGC posted net income before charges were deducted.

However, after making the deduction, the “yearly losses from 2002 to 2012” were discovered.

These financial charges refer to interest worth P9.21 billion and other charges worth P640 million, attributed from sourcing the funds through bond flotation of P7 billion, P3 billion and P12 billion Zero Coupon Bonds.

Included also in the financial charges was the interest on the issuance of debenture bonds in payment of HGC’s defaulted guaranteed accounts amounting P1.14 billion from 2006 to 2012.

“The authorized capitalization of HGC is P50 billion, however, the paid-in capital received by the corporation from the releases of the national government stood at P14 billion only as of 2012 yearend,” COA said.

The commission recommended that HGC strengthen its linkages with the national government, through the Department of Budget and Management, for the release of much needed capital. However, HGC officials claimed that in 2011 and 2012, there were notable increases in the outstanding guaranty, renewals and guaranty premium.

The gross revenue also increased by 10.41 percent from 2011 to 2012 and the net income from operations rose by 14.39 percent for the same period, they said.

“The foregoing showed that confidence of clients in HGC’s as a guarantor has been restored,” the company said.

In its official website, the HGC said that it had P9 billion worth of housing securities in its portfolio as of 2007, and has issued a total of P 72.82 billion worth of guarantees to client / partner banks.

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Ayala Land plea on reclamation project rejected

Posted on October 31, 2013 10:18:16 PM [ BusinessWorld Online ]

THE PASAY CITY government has rejected the request of Ayala Land, Inc. for more time to prepare its counterproposal to SM Group’s P54.5-million reclamation plan.

In a letter to Ayala Land Corporate Secretary Solomon M. Hermosura on Oct. 29, city legal officer Severino C. Madrona, Jr. said his office could not grant the 60-day extension requested by the company from the Nov. 4 deadline. The solicitation notice for competing tenders was published on Oct. 1.

“… [W]e cannot grant your request for extension of time to submit counterproposal without exposing ourselves to charges of violating or bending the rules to favor your company,” Mr. Madrona said, citing the 2008 National Economic and Development Authority Joint Venture guidelines in justifying the decision.

In the same letter, Mr. Madrona also clarified that the bid document fee was worth P150,000 and not P5 million, an amount Ayala Land contested.

The decision left Ayala Land with only four days to submit a counterproposal.

Ayala Land Chief Operating Officer Bernard Vincent O. Dy, in a briefing yesterday in Makati City, said: “We are reviewing all our options.”

He said Ayala Land might ask the city government for reconsideration or seek court intervention on Monday. “All options are possible,” Mr. Dy said.

Asked if the company will nevertheless submit a proposal on Monday, in case Pasay City denies its appeal, Ana Bautista-Dy, vice-president for land bank management, in the same briefing replied: “We will not submit for the sake of submitting.”

Ayala Land’s Mr. Hermosura on Oct. 23 wrote Pasay City Mayor Antonio G. Calixto that Ayala Land was keen on challenging SM Land, Inc.’s unsolicited proposal for a joint venture with the city government “to undertake the raw land reclamation and horizontal development of 300 hectares.”

SM Land, in its proposal, said it would complete the project within seven years from issuance of the notice to proceed. SM Land will also reserve 153 hectares or 51% of the area for the Pasay City government or the Philippine Reclamation Authority.

EXPERIENCE NEEDED

Mr. Hermosura, in his letter to Mr. Calixto, questioned bidding parameters set by Pasay City’s public-private partnership office, which required interested entities to have undertaken a similar reclamation project with an area measuring at least 120 hectares, “preferably within the Manila Bay area,” and to have at least P50 billion in capital.

In his response, Mr. Madrona said the reclamation experience requirement “is intended to ensure that the proponent… has sufficient relevant experience to undertake the 300-hectare reclamation project.”

In a letter to Mr. Madrona on Oct. 29, SM Land Senior Vice-President David L. Rafael said his company has experience in reclamation.

According to Mr. Rafael, SM Land, formerly named Shoemart, Inc., in 1994 entered a joint venture agreement with the Public Estates Authority -- now Philippine Reclamation Authority -- for reclamation of a 141-hectare property known as Cental Business Park 1 Island, the location of SM Group’s Mall of Asia Complex.

The city government furnished SM Land a copy of Ayala Land’s letter “in the interest of fair play.” SM Group yesterday refused to comment.

Ayala Land ended the first half with a net income of P6.62 billion, up 23.28% from P5.37 billion a year ago. Revenues rose 35.67% to P36.63 billion from P27.0 billion, while cost and expenses increased by 39.00% to P27.51 billion from P19.79 billion.

SM Land, meanwhile, is a privately held company of the Sy family that early this month merged with SM Prime Holdings, Inc. as part of a consolidation effort that will leave the listed mall developer as surviving entity. -- Cliff Harvey C. Venzon      

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Ayala Land firming up proposal for Pasay reclamation project

Posted on October 30, 2013 10:19:03 PM [ BusinessWorld Online ]

PROPERTY DEVELOPER Ayala Land, Inc. is preparing its counter proposal to SM Group’s P54.5-billion reclamation plan in Pasay City, the listed firm said in a statement yesterday, adding that it has been in talks with a foreign company on the venture.

“We have spoken to a leading international engineering company with vast experience in reclamation all over the world, and they said that it will take a minimum of two months to come up with a well thought-out development plan,” Bernard Vincent O. Dy, Ayala Land executive vice-president, said in the statement.

Ayala Land last week wrote Pasay City Mayor Antonio G. Calixto that it was keen on challenging SM Land, Inc.’s unsolicited proposal for a joint venture with the city government “to undertake the raw land reclamation and horizontal development of 300 hectares.”

Ayala Land asked for additional 60 days from the Nov. 4 deadline set for submission of competing proposals, as well as for the city government to reduce the P5 million bid document fee.

In its own proposal, SM Land said it would complete the project within seven years from issuance of the notice to proceed. SM Land will also reserve 153 hectares or 51% of the area to the Pasay City government or the Philippine Reclamation Authority.

The Pasay City public-private partnership office, in a notice published early this month, said interested entities should have undertaken a similar reclamation project with an area measuring at least 120 hectares, “preferably within the Manila Bay area,” and should have a minimum capital of P50 billion.

Officials of the city government were not immediately available for updates on Ayala Land’s requests.

Mr. Dy said reclamation project will give Ayala Land a presence in the Manila Bay area, where 60-hectare SM Mall of Asia Complex is located.

“This project is important to the company as it presents an opportunity for us to have significant presence in the Manila Bay area, contribute to the growth and progress of the city of Pasay, and make the reclaimed area the country’s model of urban and sustainable development,” Mr. Dy said.

SM Group, in a brief statement yesterday, said: “If SM will be developing [the area], it will work together with Pasay City to implement what will be good for Pasay and its community.”

Ayala Land ended the first half with a net income of P6.62 billion, up 23.28% from P5.37 billion a year ago.

This as revenues rose 35.67% to P36.63 billion from P27.0 billion, while cost and expenses increased by 39.00% to P27.51 billion from P19.79 billion.

SM Land, meanwhile, is a privately held company of the Sy family that early this month merged with SM Prime Holdings, Inc. as part of a consolidation effort that will leave the listed mall developer as surviving entity.

Shares of Ayala Land climbed P1 or 3.45% to close P30.00 apiece yesterday from P29.00 on Tuesday, while those of SM Prime rose 18 centavos or 0.97% to P18.68 each from P18.50. -- C. H. C. Venzon

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