Lopez Holdings offers to redeem $41 M in debt paper

MANILA, Philippines—Lopez Holdings Corp., formerly known as Benpres Holdings, is making a tender offer for $41 million in remaining debt held mostly by retail investors as part of efforts to complete the clean-up of its balance sheet.

The tender offer, which will give creditors the opportunity to sell back these IOUs at full face value, is part of the financial restructuring process being undertaken to ensure the company’s long-term financial health, Lopez Holdings president Salvador Tirona said in a press statement.

“These are the steps we deem necessary to finally clean up the books and return to viability,” he said.

The company’s board of directors had approved the offer to purchase for cash at their par value any and all of Lopez Holdings’ outstanding 7.875-percent Eurobond notes due 2002 issued on June 19, 1997 and Series A-2 long-term commercial papers (LTCPs) issued on September 17, 1996 and October 1, 1996.

To date, there are $20.62 million worth of Eurobonds and P864.6 worth of such LTCPs outstanding, bringing to around $41 million the total IOUs.

The company was also authorized to undertake a consent solicitation for proposed amendments to the trust agreement dated 1996 covering the LTCPs.

The offer to purchase the Eurobonds began last August 2 (9 a.m., New York City) and will expire on September 1 (5 p.m., New York City) this year.

Lopez Holdings appointed ING Bank N.V., Singapore Branch, as the dealer manager and Bondholder Communications Group LLC as the information and tender agent for the Eurobonds.

The offer to purchase the LTCPs and the consent solicitation began on Wednesday (August 3, 9 a.m., Manila) and will expire on September 1 (5 p.m., Manila) this year. Securities Transfer Services Inc. was appointed as the information agent for the LTCPs offer and the consent solicitation. The payment date for both offers is expected on or around September 6 this year.

Because of its foreign currency-denominated debt, Lopez or then known as Benpres was hit hard by the Asian financial contagion in 1997 that devalued the Philippine peso from P26 to more than P50 per dollar. Failed investments in water distribution and telecom prevented the company from meeting its debt obligations and pursuing further investment activities starting 2002.

The sale of stakes in toll roads, property development and a tertiary hospital helped the company recuperate in the last five years. The company also began buying back some debt, using dividends provided by profitable investments in media/broadcasting (ABS-CBN Corp.) and power generation (First Philippine Holdings).