P610M DBP loan backed by P1.87B collateral, says Ongpin

MANILA, Philippines—Businessman Roberto V. Ongpin said on Monday the loan extended by the Development Bank of the Philippines to his company was secured by collateral worth over twice the value of the transaction.

At the same time, the former Marcos trade minister pointed out that the borrowing firm in question – Deltaventures Resources Inc. (DVRI) – had, in fact, over P1 billion in stockholders’ equity when it took out two loans worth a combined P610 million from DBP in late 2009.

Ongpin has criticized the current board of directors of the bank for purportedly engaging in a “witch hunt” that eventually drove the bank’s lawyer, Benjamin Pinpin, to take his own life last week.

“For obvious reasons, they simply ignore the fact that these loans were completely above board, fully collateralized, have been fully paid for and in fact were extremely profitable loans for DBP,” Ongpin said.

In a case filed before the Ombudsman last week, DBP said that the paid-up capital of DVRI was only P625,000, and therefore the loan of P510 million was “816 times” more than the paid-up capital.

“It should be pointed out that DVRI was incorporated in 1977 and that the paid-up capital is of absolutely no significance,” Ongpin said.  “What is important is that by 2008, the stockholders’ equity of DVRI was already P114 million. In fact, when the DBP loans were made in 2009, the Stockholders’ Equity of DVRI was already more than P1 billion.”

Contrary to claims that the loan was not backed up by collateral, and thus exposed the government financial institution to undue risk, the businessman pointed out that it was actually backed up by P1.87 billion in securities, equivalent to 2.77 times the loan value, and higher than the bank’s baseline requirement of a collateral cover of two times the loan amount.

The collateral included some P1.1 billion worth of shares in Ongpin’s publicly listed gaming firm, Philweb Corp., and another P610 million worth of shares in Philex Mining Corp.

“The lawyers [of DBP’s current board] also maliciously state that DBP sold 50 million shares in Philex Mining to DVRI at P12.75, which were sold one month later by DVRI at P21 per share,” he said.  “They then conclude that this sale deprived the bank of ‘a potential trading gain’ of over P412.4 million. This allegation is preposterous, patently illogical and obviously intended to confuse.”

The Philex shares were bought from DBP by Ongpin’s companies at P12.75 per share on November 5, 2009.  Previous to that transaction, Philex had been trading at a range of P9 to P11 per share.  On the date of the transaction, Philex closed at P11.78, lower than the selling price of DBP to DVRI.

“So, clearly, [then DBP president Reynaldo] David made a sound decision to dispose of part of his Philex holdings at P12.75,” Ongpin said. “Mr. David certainly cannot foretell future stock price movements. For the information of the DBP lawyers, only God can do that.”