Benpres selling stake in FPII, Rockwell to pay obligations

BY BERNARDETTE S. STO. DOMINGO, BusinessWorld Reporter Lopez-led conglomerate Benpres Holdings Corp. will sell its stake in a number of subsidiaries to raise funds for debt settlement by yearend. Company President and Chief Operating Officer Angel S. Ong said the listed firm would divest its 49% stake in First Philippine Infrastructure, Inc. (FPII), formerly listed City Resources Corp., and 24.5% in Rockwell Land Corp. FPII owns 67% of toll operator Manila North Tollways Corp. "Proceeds from the asset sale would be used for debt payment," Mr. Ong told reporters on the sidelines of the company’s stockholders’ meeting on Thursday. He said the sale would get rid of "overlapping ownership" since other subsidiaries also hold shares in the two companies. Affiliate First Philippine Holdings Corp. owns 50.9% FPII and 24.5% of Rockwell. Power distributor Manila Electric Co. owns 51% of Rockwell. Shares in FPII will be sold via a secondary share offering while those in Rockwell will be disposed of through a negotiated sale or through the capital market when the latter goes public. Rockwell earlier said it was looking at listing at the Philippine Stock Exchange within the year. As of this month, the Benpres’ debt stands at $400 million or P18.4 billion. Mr. Ong said the company was discussing with creditors’ new terms for restructuring the debts. Benpres is looking at debt refinancing or share offering to settle the debts. It may opt to immediately pay in cash at a discount or go on a long-term payment of 12 years. "With the more liquid market, a more stable peso and lower interest rates, we are now in a better position to negotiate a restructuring program. So far, discussions have been constructive," Mr. Ong said. Analyst Claire Quiray of Accord Capital Equities Corp. said the plan would be beneficial to the company. "It’s always good to raise money from the stock market than borrow from banks. With the backdoor listing of FPII and the planned listing of Rockwell, they will be able to sell shares to the public. I think people will buy. They will be able to raise funds for debt payments," she said. Mr. Ong said the company is also scouting for a new investor for subsidiary Bayan Telecommunications, Inc., which is under rehabilitation. "We are looking for a new foreign investor who would want to go into telecommunications. It’s a matter of finding the right structure to put it together." The firm also hopes to sell its less-than-5% stake in Digital Telecommunications Philippines, Inc. and about 67% in Central CATV, Inc. or SkyCable. Benpres posted P731 million in net income for the first three months of the year, down 64% from P2.05 billion in 2006. On Thursday, Benpres shares ended 1.88% lower to P5.2 per share.