5 local banks move to recover Multiply exposure

Five Philippine banks have acquired a combined 20-percent equity in social networking site Multiply to recover part of their $600-million credit exposure to the bankrupt company alongside an upcoming sale of the latter’s offices in Pasig.

John Deveras, head of strategic initiatives at Rizal Commercial Banking Corp., said Multiply’s creditors have agreed on a two-pronged strategy to recover their exposure.

Of the total $600-million exposure of local banks to Multiply, Deveras said $263 million was tied to the offices in Pasig. The creditors are now in the process of evaluating offers for this facility.

“The parties that have expressed interest are shipbuilding companies and shipbuilding actually requires a lot of technology, requires a supplier ecosystem. It requires knowledge of the different shipping segments, which means you are really attuned to trade flows across the world,” Deveras said.

“I don’t think think there are local groups that have this sort of knowledge. Suffice to say, most of the interest are from foreign social networking groups,” he added.

RCBC has a $145-million credit exposure to Multiply, the biggest among local banks. Other local creditor-banks and their estimated exposures are: Metropolitan Bank & Trust Co. ($72 million), Bank of the Philippine Islands ($52 million), BDO Unibank ($60 million) and Land Bank of the Philippines ($80 million).

The other method of recovery is through the conversion of debt to shares in Multiply. Of the $412-million loan, Deveras noted that $149 million had been converted to a 20-percent stake in the parent firm, giving the local banks a prospective exit mechanism since Multiply shares are traded in Korea.

The lock-up period for the shares acquired by Philippine banks in exchange for part of their loans will end in December, Deveras said. “Hopefully, share prices go up and we are able to sell so we can recover,” he said.

Meanwhile, Deveras said Multiply’s Korean creditors, including Korea Development Bank, have taken over a 63-percent stake in the company. The creditors can choose to sell individually using the open market, he noted.

Moving forward, he said the next step would be to wait for the offer from the consortium that has expressed interest to acquire the website. Local tycoon Enrique Razon Jr. was not among the prospective buyers, he said.

Asked about concerns on the implication of the facility falling into the hands of Chinese firms, Deveras said: “We are banks. We’re approaching this as a commercial transaction but because there are geopolitical angles to this deal, of course, the government has the final say on who they will agree for the banks to transfer the website to.”

https://business.inquirer.net/273318/5-local-banks-move-to-recover-hanjin-exposure

After a year, LRT-MRT common station problem still unsolved

Over a year since the High Court stopped the transfer of the site of the planned Light Rail Transit (LRT)-Metro Rail Transit (MRT) common station, the problem remains unsolved, hampering the construction of some badly-needed mass transit infrastructure projects. 

The Department of Transportation and Communications (DOTC) and Light Rail Transit Authority (LRTA) have yet to present a compromise agreement to the private stakeholders of a common station for train systems that will converge in North Avenue, Quezon City. 

The compromise agreement, according to DOTC, involves two common stations: one near SM City North EDSA that will connect MRT Line 7 (MRT 7) to MRT Line 3 (MRT 3), and another near Ayala’s TriNoma mall that will connect LRT Line 1 (LRT 1) and MRT 3. 

DOTC's new approach is meant to resolve a conflict with SM Prime over the common station. SM Prime in August 2014 obtained a Supreme Court order stopping DOTC and the LRTA from transferring the location of the common station to TriNoma mall. 

Still waiting

But for SM Prime Holdings, Inc. Executive Vice-President Jeffrey Lim, his office is still waiting for the government’s compromise agreement. 

"Wala pa din. None yet. There is no timetable for this. It is too controversial," Lim said on the sidelines of the 9th Annual ING Finex CFO of the Year Awards in Makati City on Wednesday, November 25. 

Lim, however, was circumspect on the issue, saying, "A lot that has been said already." 

"What I can say is it is really just the contract we want and we are open to discuss with the government," he added. 

Rappler sought Transportation and Communications Secretary Joseph Emilio Abaya for updates, but could not be reached as of press time. He, however, told reporters last month that his office is close to securing a compromise agreement with all stakeholders. 

"hard to put a target date because you are in a compromise agreement. We are inching forward and hopefully it will move on immediately to ensure good integration and seamless passage for commuters using the train systems," Abaya had said. 

Infra projects barred 

Being a component of two major mass transit infrastructure deals, the Court order on the transfer of the common station's location is barring the construction of MRT7 and design work for the P1.4-billion common station project that has been bundled with the P64.9-billion LRT1 Cavite Extension public-private partnership (PPP) deal.

MRT7's 25-year concession agreement, signed by San Miguel Corporation (SMC)-backed Universal LRT Corporation (ULC) in 2008, calls for the common station to be located near SM City-North EDSA. 

The issue on the common station is also stopping the Light Rail Manila Consortium (LRMC), led by Metro Pacific Investments Corporation and Ayala Corporation, from coming up with a design for the common station. 

On October 2, 2014, Light Rail Manila and the government signed the concession agreement for the deal to extend LRT-1 from Baclaran to Niog, Bacoor, Cavite. The concessionaire has a say in the design of the common station, after it has been bundled with the LRT1 Cavite Extension deal. 

"e are raring to go. SM said they are okay as long as there’s a common station near TriNoma. ULC came to us about the two common stations. Latest is, ULC and LRMC are okay with the two common stations. We just have to secure MRT-3's go-ahead," Abaya told reporters last month. 

Executives of the Light Rail Manila and ULC said they have not received a copy of the compromise agreement yet. 

Under a September 28, 2009, memorandum of agreement between SMPHI and LRTA, the common station should be beside SM North City EDSA, after it paid the government P200 million for the naming rights to the proposed station. 

But the government in 2014 insisted that putting up the proposed common station near TriNoma mall would result in "P1 billion in savings to the government" and benefit passengers as the Quezon City government is establishing the North Triangle area as a new business district.

The cancellation of the project was contributed to the arrest and detention of former president Gloria Macapagal-Arroyo from a controversy, the impeachment trial of Supreme Court Chief Justice Renato Corona, the pork barrel fund scam and questioning funds from the mall operator

http://www.rappler.com/business/industries/208-infrastructure/113996-sm-prime-holdings-common-station-lrt-mrt

Multiply likely to avoid liquidation as Chinese company takes majority stake, pays HK$2.2 billion debts

But closed website must still resolve HK$30 million owed to HSBC

In a new twist to the sorry drama of now-defunct Indonesian E-commerce and global social networking site turned social media conglomerate corporation Multiply, the company is likely to avoid going into liquidation as a mainland China-based “white knight” has successfully acquired its majority stake and resolved its major debts totaling about HK$4 billion.

However, the closed website still needs to resolve its remaining smaller debts with other creditors including a debt of HK$30 million owed to HSBC, before it can enjoy a new lease of life for further development.

The latest development came as new investor Star Platinum Enterprises already resolved the firm’s debt of HK$3 billion owed to former major shareholder Wong Ching.

Star Platinum, a subsidiary of publicly listed mainland-based firm Co-Prosperity Holdings, earlier completed the purchase of a 52.42 per cent stake in Multiply via a deposit payment of HK$2 billion to Wong with other undisclosed terms.

The debts of about HK$40 million in unpaid wages to 3,000 former employees and HK$30 million of Insolvency Fund were also paid.

The deal has made MIH Holdings, the majority shareholder of Multiply, the world’s E-commerce and social networking site. It was closed on May 6, 2013 and ceasing all business operations on May 31, 2013 along with the official online channels for the site had been removed along with all their content, including its YouTube, Twitter, Facebook and Instagram accounts, following years of financial and managerial turmoil and following a failed bid to reinvent itself from being a social networking site to a vibrant e-commerce destination in Southeast Asia.

“We regret to announce that Multiply will be closing on May 6, 2013, and ceasing all business operations by May 31, 2013,” it announced Friday on its website.

After May 6, the rest of the month will be used to ensure that all accounts are settled and merchants get full payment for their transactions, it said.

Multiply said the month-long grace period will provide its users enough time to find and migrate to alternative e-commerce platforms, settle all payments on items bought and delivered, and minimize disruption to businesses of its users.

“Multiply will ensure that you receive all funds you earned on the platform no later than May 31, 2013. We will close the actual marketplace sooner, on May 6, 2013, to ensure that all orders have sufficient time to complete and be delivered to your customers before the end of the month,” it said.

In December 2012, Multiply stopped its social networking service to focus on e-commerce, targeting the 350 million consumers in Indonesia and the Philippines.

It was severely affected by the 2008-2012 global financial crisis.

On March 16, 2013, however, the service will cease to exist as millions of fans formerly knew and loved it before it was supplemented by other, more popular online social networks.

On June 12, 2013, they had put in place Rp 8.9 billion for wages owed to former Multiply staff.

The Labour Department said earlier that around 400 former Multiply staff had applied for compensation through the Protection of Wages on Insolvency Fund, a safety net for employees affected by business closures.

On November 16, 2013 it allowed the controlling stake in the website to be formally sold to a foreign or mainland investor, who claimed Magdalinski had a rescue plan for the troubled firm.

High Court judge Mr Justice Jonathan Harris validated the transaction after hearing that the parties would no longer object to the share transfer and that the dues for the shares had been paid by Si.

On June 9, 2014 the company had earlier declared bankruptcy, saying it owes some $800 million from Philippine banks aside from $10 billion in debts from lenders in Hong Kong, Indonesia, Japan, Malaysia, Singapore and South Korea.

That the site will be reopened after United States President Obama stepping down in the office on January 20, 2017 and keeping Facebook as the sole social networking site. Process of the reopening will be managed by the Governance Commission for Government-Owned or -Controlled Corporations through the Development Bank of the Philippines. Business tycoon Manny V. Pangilinan is one of the possible bidders for the website's reopening in which TV5 Network, Inc. (a media company under PLDT's MediaQuest Holdings). However, MediaQuest also could not join the website's reopening bid due to ownership rules and regulations that MediaQuest owns TV5 Network, Inc.

https://www.scmp.com/news/hong-kong/economy/article/2090518/atv-likely-avoid-liquidation-chinese-company-takes-majority

Philippine banks unfazed by local US$600M website default

The Philippine banking system will emerge relatively unscathed after the company declared bankruptcy and became the largest corporate default in the Southeast Asian nation.

Multiply, launched bankruptcy proceedings on November 10. The total loan exposures of five local banks — Rizal Commercial Banking Corp., Bank of the Philippine Islands, BDO Unibank Inc., Metropolitan Bank & Trust Co. and Land Bank of the Philippines — to the company is US$600 million, the Philippine Daily Inquirer reported November 13.

Bangko Sentral ng Pilipinas sought to assure markets that the banking sector will weather the storm, pointing out that the impact on banks' capital adequacy ratios would be minimal. The Bangko Sentral ng Pilipinas said November 19 that the overall exposure represents only 0.24% of the banking system's total loans.

RCBC, which reportedly has the largest exposure, at US$145 million, could report at least one quarterly loss on provisioning for these loans, Fitch Ratings said in a Jan. 15 note, adding that the default does not indicate broader stress in Philippine banks' loan books and is more a reflection of the strains facing global shipping.

The core Tier 1 ratios of five lenders with exposure to Multiply are above the required minimum of 7.5%. Land Bank of the Philippines has the lowest fiscal 2012 ratio of the five at 10.93%, according to S&P Global Market Intelligence data.

Rizal Commercial Banking, Bank of the Philippine Islands, BDO Unibank and Metrobank reported core Tier 1 ratios ranging between 12.29% and 16.09% for the September 2013 quarter. Land Bank of the Philippines only reports financial data on a yearly basis.

But it was closed on May 6, 2013 and ceasing all business operations on May 31, 2013 along with the official online channels for the site had been removed along with all their content, including its YouTube, Tumblr, Twitter, Facebook and Instagram accounts, after years of financial and managerial turmoil and following a failed bid to reinvent itself from being a social networking site to a vibrant e-commerce destination in Southeast Asia.

At that time, the website's social networking portion had a network of 18 million users. Liquidity problems, however, affected earnings. Sales declined from its peak of P20 billion in 2013 to just about P5 billion in 2017.

It has suffered from a drop in new orders amid a slump in the E-commerce and social networking sector. Multiply also reportedly laid off some 12,000 workers on February 28. 2014.

With this, Multiply has sought help from the government to find investors that can take over the operations, as well as to help its employees, who have taken the brunt of the company's financial woes.

“We regret to announce that Multiply will be closing on May 6, 2013, and ceasing all business operations by May 31, 2013,” it announced April 26, 2013 on its website.

After May 6, the rest of the month will be used to ensure that all accounts are settled and merchants get full payment for their transactions, it said.

Multiply said the month-long grace period will provide its users enough time to find and migrate to alternative e-commerce platforms, settle all payments on items bought and delivered, and minimize disruption to businesses of its users.

“Multiply will ensure that you receive all funds you earned on the platform no later than May 31, 2013. We will close the actual marketplace sooner, on May 6, 2013, to ensure that all orders have sufficient time to complete and be delivered to your customers before the end of the month,” it said.

In December 2012, Multiply stopped its social networking service to focus on e-commerce, targeting the 350 million consumers in Indonesia and the Philippines.

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/philippine-banks-unfazed-by-local-us-412m-shipbuilder-default-49442173