MPC board okays creation of Metro Pacific Investments Corp

The board of directors of Metro Pacific Corp. (MPC) has approved the creation of new debt-free investment holding company called Metro Pacific Investments Corp. (MPIC) to replace MPC as the new listed entity, as part of a major reorganization and recapitalization effort.

MPC’s entire shareholdings in Landco will be sold to MPIC which will eventually be owned by the existing shareholders of MPC.

Officials said the plan is a product of the ongoing initiatives to restructure/settle the remaining outstanding obligations of MPC, to create a new vehicle that can raise funds, make long-term investments, and support the continuing expansion of Landco’s businesses, and to realize and/or preserve existing shareholder values.

This as MPC posted a P235.3 million net income for 2005, from a net loss of P281.2 million in 2004. Subsidiary Landco’s net profit stood at P62 million while Negros Navigation Co. (Nenaco) incurred losses of P126 million, attributed to significant provisioning against the carrying cost of certain ships.

It is intended that Landco will comprise the initial core business of MPIC and will receive new capital from the latter to expand its portfolio of operations. Landco is currently preparing for an accelerated growth plan which seeks to increase the size and scope of its business activities over the next five years. Officials, however, emphasized that MPIC will not be limited to real estate.

"The achievement of Metro Pacific’s debt reduction goals in 2005 is testament to our commitment to keep the promises we made to eliminate its debts, a workout that lasted several years and required difficult choices and sacrifice. Metro Pacific’s recapitalization plan paves the way for it to eventually become a significant participant in key areas of the Philippine economy once again," Metro Pacific chairman Manuel Pangilinan said.

For his part, MPC president Jose Ma. Lim noted that the new listed company that will emerge will be an investment vehicle with sound earnings potential, ample cash, and the strength to undertake significant growth.

The first stage, which involves basically the sale of MPC’s shareholdings in Landco to MPIC, will be completed by June 2006. The entire plan, up to the rights offering, will be completed by September this year.

The plan contemplates the revitalization and relaunch of MPC’s core business value, following a capital restructuring exercise that will clean up the balance sheet of MPC.

The relaunch will be effected through MPIC, a newly formed corporation which is presently a wholly owned subsidiary of Metro Pacific Resources Inc. (MPRI) and Metro Pacific Holdings Inc. (MPHI), both existing majority shareholders of MPC and Philippine affiliates of First Pacific Co. Ltd. (FPC) but which is envisaged to be eventually owned by the existing shareholders of MPC.

MPIC will serve as the corporate vehicle to continue the real estate business of MPC, accept new investments from both existing and new investors, and undertake other future projects.