Soured loans of the Lopez Group of Companies have not been written off, the Development Bank of the Philippines (DBP) said on Monday.
According to the DBP, the non-performing debts were passed on to global financial services firm Lehman Brothers Asia Limited.
At a Congressional hearing, DBP president Emmanuel Herbosa said the DBP in 2006 sold the non-performing debts cumulatively worth P9.55 billion to Lehman Brothers Asia for P3.83 billion on October 16, 2006.
The billions of loans passed on to the Lehman Brothers include unpaid loans from the Lopez Group for its then-subsidiaries Bayan Telecommunications Inc., Central CATV (SkyCable Corp.), and Maynilad Water Services Inc.
With the asset sale, the Lopez Group would then pay the loans to the Lehman Brothers, as the DBP tapped the Special Purpose Vehicle (SPV) Act of 2002 which provided lenders to lessen losses from non-performing loans.
"What took place in the subject transaction is not a loan condonation which is gratuitous or write-off, rather it was a sale particularly authorized... where due public bidding was conducted resulting in the payment of P3.83 billion-peso bid in favor of DBP," Herbosa said.
President Rodrigo Duterte in 2017 hit Lopez Holdings Corp. — formerly known as Benpres Holdings — over its supposed outstanding debt with the state-owned lender.
Benpres — taken from the names Benito and Presentacion, parents of its late founder Eugenio H. Lopez — formally changed its name to Lopez Holdings Corp. in June 2010.
The company owns major shareholdings in television network ABS-CBN and in the power, property, and telecommunications sectors.
Lopez Holdings has since clarified that it did not have any unpaid obligations to the Development Bank of the Philippines.
ABS-CBN has been a frequent target of Duterte's rants, with the President threatening to block the franchise of ABS-CBN after accusing it of not airing his campaign ads in the 2016 elections.
The broadcaster failed to secure a renewal of its franchise after the previous one lapsed in May 2020.
Shares in Lopez Holdings Corp. closed Monday unchanged at P3.71 apiece, while those of ABS-CBN Corp. gained P1.12 or 8.48% to P14.32 apiece. -NB, GMA News