Real estate execs take control of BDO leasing unit

MANILA, Philippines — BDO Unibank Inc. has identified the buyers of its controlling stake in a leasing and finance company that it no longer finds attractive due to new accounting regulations.

In a disclosure to the Philippine Stock Exchange, BDO said the buyers of its 88.54 percent stake in BDO Leasing and Finance Inc. (BLFI) are Victor Y. Lim (four percent), Vittorio P. Lim (33 percent), Luis N. Yu (33 percent), and third party buyers (18.54 percent).

“None of the buyers have any material relationship with the company, its directors, officers or any of its affiliates,” BDO said.

Victor and Vittorio are listed as chairman and president of V2S Property Developer Co. Inc, respectively, while Yu is listed as chairman emeritus of 8990 Holdings Inc.

BDO said the consideration for its controlling stake in BLFI is the outstanding capital stock equivalent to the total sellers’ pro-rata share in the net asset value (NAV) of the company estimated at P5.45 billion and a premium of P400 million.

“The actual price per share shall be finalized prior to the launch of the mandatory tender offer and upon determination of the NAV as of closing date of the transaction,” the bank said.

BLFI president Roberto Lapid said the newly incorporated BDO Finance Corp. would assume current lease transactions booked in the company to provide continuity to existing clients.

“We wish to reassure BDOLF clients that their financing requirements will continue to be serviced, and there will be no effective change in their existing lease arrangements that will be assumed by BDO Finance,” Lapid said.

BDO said the restructuring of its leasing business is being undertaken to optimize the financial needs of clients in light of new accounting regulations covering lease transactions.

Lease transactions are less attractive option to corporate borrowers compared to the past as the International Financial Reporting Standards (IFRS 16) that took effect January last year requires leases to be recognized on-balance sheet, similar to a loan facility.

The Sy-led bank said BDO Finance would provide customers continuing access to lease products and services.

BLFI booked a net loss of P38.5 million from January to September last year due to margin compression as the company’s liabilities adjusted faster to current interest rates compared to its lease receivables. Gross revenues slipped five percent to P2.26 billion.

Its total assets fell by 23 percent to P32.5 billion mainly due to investment maturities and sale of part of the company’s lower yielding portfolio.