Screengrab from stiholdings.com
MANILA, Philippines–The Tanco-led educational network operator STI Holdings and the Benitez group are wrestling for control of the Philippine Women’s University (PWU) as disagreements over a three-year old joint venture deal crop out.
STI has moved to take over a controlling stake in the PWU, citing the Benitez group’s failure to meet obligations under a cooperation deal forged in 2011. This is on the heels of a call from the head of PWU, Francisco Benitez, to terminate the group’s joint venture agreement with STI.
In a disclosure to the Philippine Stock Exchange on Wednesday, STI served PWU and its sister company Unlad Resources Development Corp. with notices of default. STI demanded P702 million from PWU and P223 million from Unlad covering interest, penalties, lawyers’ fees and value added taxes within seven days. The notices were hand-delivered on Dec. 9, STI said in a separate statement.
Based on the disclosure, STI also sought control of two-thirds of voting rights in the PWU’s board.
The STI statement said it “bailed out” PWU in 2011 when creditor Banco de Oro Unibank was about to foreclose on its assets. STI bought the debt paper from the bank worth P223 million and lent the school another P26.5 million to tide it over. It also lent Unlad P198 million.
Under the agreement, STI would be paid through the conversion of all its loans into 40-percent equity in Unlad, which in turn was to absorb all the real estate assets of PWU in a share-for-property swap and manage PWU.
In return, STI said the Benitez group was to raise the authorized capital of Unlad to P1.5 billion to accommodate the infusion and be allowed to issue the shares as payment to STI. Unlad’s capital remains at P20 million to date, STI noted.
The Benitez group was also supposed to get a ruling from the Bureau of Internal Revenue saying that the share-for-property swap was tax exempt under the 1997 tax reforms. In case no exemption was granted, the Benitez Group was supposed to shoulder the tax liabilities.
The STI statement said that during the joint board meeting of PWU and Unlad last month, PWU and Unlad chair Francisco Benitez called for the termination of the joint venture agreement with STI. It was further noted that during Unlad’s stockholders’ meeting last December 5, the Benitez Group, through Conrad Benitez II, called for the meeting’s adjournment and to defer the increase in its authorized capital allegedly because of a “legal impediment” to the sought tax exemption.
“We came to help PWU and expect to get paid through shares of stocks. After three years of waiting, it now appears the other party has no intention of living up to its end of the agreement. The notices of default were a last resort but necessary to protect the interest of the company and its shareholders,” STI said.
In case the Benitez Group fails to pay within the deadline, STI is invoking its agreements, which require the Benitez Group to deliver to STI control of PWU’s general membership and board of trustees, and the real properties of PWU and Unlad, including the Manila and Quezon City campuses.
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