East West Bank can’t compel conversion of VMC debt to equity

GOTIANUN-led East West Bank Corp. can not compel Victorias Milling Co. to allow the swap of close to P350 million worth of convertible notes into equity, the Securities and Exchange Commission en banc has ruled.

Favoring an appeal submitted by VMC in this securities conversion dispute, the SEC denied East West’s motion to compel the sugar firm to allow the conversion of this creditor-bank’s debt notes into equity, a move that would have given it the opportunity to unlock higher values from its debt exposure to VMC.

A hearing panel from the SEC ruled in favor of East West’s motion to convert debt into equity last March but this was overturned by the SEC en banc., based on a VMC disclosure to the Philippine Stock Exchange on Thursday.

East West is the only major creditor-bank that has refused to accept VMC’s bid to prepay debt in accordance with the debt restructuring agreement, arguing that conversion should be given preference over prepayment.

VMC, for its part, sees the redemption of convertible notes as part of efforts to cut its debt stock and soon exit corporate rehabilitation.