Philippine Daily Inquirer
Chopper by the dozen
UH-OH, ANOTHER corporate debtor has gone wrong.
The court just issued an order calling for “suspension of payments” for the more than P8 billion in debts of a financially troubled group of companies known as International Copra Export Corp. or Interco.
Again, the total debt amounts to more than P8 billion. It is not a small amount even to the big banks that have exposures in the firm.
Interco is also asking the court to put the group under receivership, prior to the court’s approval of a rehabilitation plan. Hearing on the rehab plan is set for this November.
This means the creditors will still have a couple of months to nurse their big-time headaches over their Interco accounts. From what I heard, some 12 banks lent billions of pesos to Interco.
Also, from the looks of it, the same banks may have to agree to some “charity” measures to make the rehab cheaper for Interco—things like debt write-off.
The creditors may also be forced to convert part of their exposures into equity in the Interco group, or accept payments in kind ( dacion en pago).
Remember—there are a dozen of those creditor banks with billions of pesos in exposure in Interco.
From what I gathered, the creditors do not include any of the numerous foreign banks in the country.
As expected, the biggest of the big local banks are among the group’s top creditors, except for a couple of them.
Government-run Land Bank of the Philippines has no exposure in Interco. And so thus the country’s largest bank, Metropolitan Bank and Trust Co.
In banking, as in anything, it seems some people are smarter than the others.
*** AT ONE TIME, Interco was the country’s largest manufacturer and exporter of coconut oil. Perhaps it was even the largest in the whole world, for the Philippines used to account for more than 70 percent of the world’s supply of copra and coconut oil.
The business started with the patriarch of the Luy family, the old man Luy Kim Guam, who is the chair emeritus of Philippine Bank of Communications, or PBCom.
The bank itself is also a business in turmoil due to the continuing war between two groups of stockholders.
Surprisingly enough, PBCom is said to have no exposure at all in Interco. There must be a banking trick here somewhere.
The Luy family, anyway, used to be the biggest single stockholder in PBCom, which was formed way back in the 1930s.
When the old man Luy handed down the family fortune to the younger generation, his son Enrique Luy became chair of PBCom.
Based on official records, nevertheless, PBCom has no exposure in the Interco group. I kid you not.
*** THE THING is the Interco group also rode the bandwagon called real estate development.
In fact, the initials of the old man Luy went into the name of one of the most modern and tallest buildings in the heart of the Makati business district—the LKG Tower on Ayala Ave.
Word goes around that part of the rehab plan is the sale of “non-core” assets of Interco to raise funds to pay for its billions in pesos in debts.
Still, the biggest heartbreak for the creditor-banks may be Interco’s forgetfulness. The group forgot to take care of its core business, which was coconut oil, its biggest cash cow in the past several decades.
From what I gathered, the group no longer runs the Interco’s manufacturing plant in Davao City.
Word has it that the Luy family already leased out the facilities to another company called Ducom, which is based in Dumaguete City (Negros Oriental).
Really, the banks cannot be that confident regarding the group’s cash flow when its income just comes from rental.
*** AND SO the dramatics moved several notches higher as soon as the Senate started to investigate—in aid of legislation, of course—the reported involvement of high officials in the Aquino (Part II) administration in the jueteng racket.
Beaten black and blue in the media coverage of the “investigation” was DILG Undersecretary Rico Puno, who as it turns out is a close personal friend of Benigno Simeon (aka BS). That is the reason, I guess, why Puno was in the frontline to face the media attacks against BS and his administration on the police comedy of a rescue at the park on Aug. 23. Puno was a trusted friend of the President, first and foremost.
Anyway, I have a little problem in all those numerous congressional hearings. I presume we are all after the truth. Yet everybody can always be expected to give out a verdict, subtly or directly. It is not fair.
One lawmaker, apparently inspired the presence of electronic media, waxed dramatic in to trying to pin down everybody in the jueteng controversy.
Our beloved lawmaker of course still has to recover from political setbacks, such as losing in the elections—twice.
Sure, I agree, let us conduct a lifestyle check for all those dragged into the jueteng controversy once and for all. Let us make the results public. And while we are at it, let us also conduct a lifestyle check on our beloved lawmakers. I am not sure a lot of them will pass the exam.
Gosh—they did not even have their facts straight. Puno is not related to former Interior and Local Government Secretary Ronnie Puno. Let us stop the dramatics right now please.