Judge allows deferment of TPG payments to plan holders

this story was taken from www.inq7money.net
URL: http://money.inq7.net/topstories/view_topstories.php?yyyy=2006&mon=02&dd=17&file=4

Judge allows deferment of TPG payments to plan holders
Posted: 3:02 AM | Feb. 17, 2006
Elizabeth L. Sanchez
Inquirer

A JUDGE of the Regional Trial Court of Makati City has allowed pre-need company TPG Corp. to temporarily defer payments to its plan holders and creditors.

TPG sought the court's protection on Feb. 9 to have some breathing space to restructure its debts to plan holders.

It admitted in its court petition that it would be unable to meet its obligations to plan holders.

TPG is the fourth pre-need company to be rocked by financial problems, prompting it to file for corporate rehabilitation. The other firms are Pacific Plans Inc., Platinum Plans, and College Assurance Plan Philippines Inc.

Judge Sixto Marella of the Makati court issued the stay order after he found the TPG petition for rehabilitation as "sufficient in form and substance."

Given the stay order, TPG is prohibited from selling, transferring or disposing any of its properties, and making any payment of its outstanding liabilities.

The court also appointed lawyer Arthur Ponsaran as TPG rehabilitation receiver.

A hearing on the petition is scheduled for April 5.

TPG said claims covering the second semester of school year 2005-2006 threatened to deplete its trust fund.

TPG's trust fund assets are worth P900 million.

As of last month, pending claims for payment of TPG education and pension plans had reached P159.4 million. Of the total, claims for open-ended education plans amounted to P81.9 million.

TPG has 28,903 open-ended plan holders, of which 6,209 are expected to make their claims for the present school semester.

There are also pending claims from pension plan holders, worth roughly P28.97 million.

TPG is also facing claims for payment of pre-terminated education and pension plans worth P46 million.

For school year 2006-2007, claims of open-ended education plan holders are estimated to reach P200 million.

As of December, TPG had cash of P149.9 million. It had total assets of P1.3 billion and total liabilities of P1.2 billion.

Pre-need firm TPG Corp submits self for court rehab

Pre-need firm TPG Corp submits self for court rehab
By Zinnia B. Dela Peña
The Philippine Star 02/16/2006

In line with its plan to transform itself into an investment holding company, pre-need firm Professional Financial Plans (TPG Corp.) has sought corporate rehabilitation with the Makati Regional Trial Court.

TPG is the fourth pre-need firm to seek refuge from the court for a moratorium on its debt payments to ensure continued operations.

In a press briefing yesterday, TPG chairman Francisco Colayco said the company’s move to seek the court’s intervention was in line with efforts to implement its STEP-UP program, aimed at recovering from its liquidity problems and ensuring the orderly settlement of obligations to planholders.

TPG’s trust fund is currently valued at between P800 million to P900 million while its liabilities stand at P1.1 billion.

The STEP-UP (Scholars Trust Fund with Equitable Pay-out for Unified Preservation) program calls for preserving the pre-need firm’s trust fund and reserving a portion of scholars’ availment benefits as equity in a financial holding company that will have interests in a diverse portfolio of financial services.

"In subsequent discussions with the SEC (Securities and Exchange Commission), it was determined that without 100 percent planholder consent to the program, the SEC can neither approve nor disapprove STEP-UP. Given that 100-percent approval is not only highly improbable but physically impossible, the only available option to ensure achievement of the STEP-UP objectives is to seek a court mandate for its implementation," Colayco said.

"We did everything possible to reach majority of our customers. With an 80 percent on-the-spot success rate in converting our planholders, we feel very good about our plan’s acceptance," Colayco further said.

When TPG is finally converted into a holding company, planholders will be rewarded because their educational plans will be converted into common and preferred shares in the new company, thus making them shareholders of the new company.

Also in line with its vision to become an investment holding company, the company is planning to acquire a thrift bank and put up a nursing school for the benefit of its planholders.

Colayco stressed that TPG has consistently served its planholders for the past 30 years. Since 1992, TPG has paid over P2.7 billion in plan benefits, he said.

"We would like to assure everyone that our commitment to the vast majority of our planholders stands. We only ask for a little more patience and for their prayers for the speedy approval of our plan, "Colayco said.

 

http://www.philstar.com/philstar/NEWS200602160705.htm

BSP tightens rules on trust investments of pre-need firms

BSP tightens rules on trust investments of pre-need firms
By Des Ferriols
The Philippine Star 03/17/2006

The Bangko Sentral ng Pilipinas (BSP) has tightened its regulations on pre-need funds, restricting the investments of the pre-need firms’ trust funds in the hope of preventing systemic risks stemming from poorly-managed trust funds.

The move came in the heels of the latest evaluation report of the International Monetary Fund (IMF) which expressed concern over the pre-need industry and suggested that further steps are necessary to contain the problem.

The BSP’s Monetary Board (MB) approved the new regulations governing the acceptance, management and administration of trust funds of pre-need companies, a move prompted by the yet unresolved problems of the College Assurance Plan (CAP).

The BSP said the MB had issued a new memorandum intended to provide greater protection to pre-need planholders by adding more prudential measures in the administration of their trust funds.

The BSP said it has limited the investment choices to low-risk investments such as government securities and fully-secured loans. This provision was put in place in the absence of specific authority and guidelines from the Securities and Exchange Commission (SEC) allowing alternative investments.

The BSP said it would also restrict transactions of the trustee bank not only with its directors, officers, stockholders and related interests or DOSRIs but also those of the trustor pre-need company.

"This is a safeguard against conflicts of interest," the BSP explained.

To further insulate pre-need planholders from prejudice arising from such conflicts of interest, the BSP said the new rules also set qualifications on the capacity of the trustee bank to administer the funds of an affiliated pre-need company.

"In addition to these, the trustees shall still be governed by the core duties of loyalty and prudence in the management and administration of the said trust funds," the BSP said.

The BSP said banks that administer trust fund of pre-need companies have one year to comply with the new requirements. The new rules also cover other financial intermediaries performing trust and other fiduciary business and investment management activities.

The new rules are expected to allay fears that the pre-need industry could ultimately pose a systemic risk to the financial system.

The IMF had recommended greater protection for planholders as well as restrictions on investments and the prohibition against connected lending.

According to the IMF, high commissions and operational costs account for up to 49 percent of a planholder’s contribution and this should also be reviewed by the SEC which has the jurisdiction over pre-need companies.

http://www.philstar.com/philstar/NEWS200603170716.htm

Preneed firm seeks rehab

Preneed firm seeks rehab

By Jenniffer B. Austria

Another preneed company has filed for corporate rehabilitation with the Makati Regional Trial Court, the fourth to do so after industry funds failed to cope up with rising tuition.

Professional Financial Plans, formerly TPG Corp., sought the help of the Makati court, citing continued increase in tuition and restrictive trust fund rules that bled company’s finances.

TPG filed the petition on Feb. 7. It was the fourth preneed company to seek rehabilitation after College Assurance Plan Philippines Inc., Platinum Plans Philippines Inc. and Pacific Plans Inc.

Professional Plans chairman Francisco Colayco said in a press conference yesterday that the company sought court solution to implement its proposed Scholar Trust Fund with Equitable Pay-outs for Unified Preservation, or STEP-UP.

“The word rehabilitation is often taken negatively. But in this case this is a welcome opportunity because only through the STEP-UP program that we will be able to give benefits to planholders,” Colayco said.

The company earlier asked the Securities and Exchange Commission to approve the implementation of STEP-UP. The SEC instead asked the company to secure approval of all planholders before clearing it.

“Given that 100 percent approval is not only highly improbable but physically impossible, the only available option to ensure achievement of the STEP- UP objectives is to seek mandate for its implementation,” Colayco said.

TPG conducted about 800 sessions with planholders to get their approval of STEP-UP. Only 12,000 planholders out of 28,000 agreed to the implementation of the scheme.

Colayco said some planholders rejected STEP-UP because of reduced benefits.

The STEP-UP program puts a 15 percent cap on the benefits of traditional planholders and offers noncash portion of the payouts in terms of shares into the company.

The program also redefines the benefits of fixed value education and pension plans without lowering their value.

TPG asked the court in its petition for rehabilitation to allow the company to use proceeds of its P900 million trust fund for diversification into a financial holding company that will engage in financial, credit and micro-lending services.

The company also plans to establish one or two colleges in Visayas and Mindanao.

The plan also seeks to pay pending education plan availments for school year 2005-2006 and pension plan maturities.

TPG’s trust fund is currently valued at P900 million and has assets of P1.1 billion. Liabilities, however, stood at P1.3 billion.

http://www.manilastandardtoday.com/?page=business01_feb16_2006