Monday, August 27, 2007 Shareholders question CAs By Malou M. Mozo Sun.Star Staff Reporter
MINORITY shareholders of Waterfront Philippines Inc. (WPI) has raised issues on related party transactions, particularly loans extended to businesses that are considered “outside of the company.”
Lawyer Rolando Lim, minority shareholder of WPI, questioned loans totaling more than P900 million granted to related parties within and outside of the company.
“Ang kwarta sa kompanya gipautang sa related parties outside of WPI nga non-interest bearing ug collateral free pa,” he said during the WPI shareholders’ meeting last Saturday.
Lim was referring to a provision in the WPI Annual Report 2006 on “related party transactions,” which states that “in the ordinary course of the business, certain related parties within and without the Group (WPI) (were) extend(ed) and obtain(ed) interest-bearing and non-interest bearing, collateral-free cash advances to and from one another to finance working capital requirements and construction of certain hotel projects.”
The net dues from related parties include: P491 million to The Wellex Group Inc.; P302 million to Metro Alliance Holdings and Equities Corp.; P142 million to Forum Holdings Corp.; P4.8 million to Polymax Worldwide; and P4.4 million to Pacific Wide.
Lim said the money could have been used to pay the company’s combined loans of P571 million to the Philippine National Bank, Industrial Bank of China in Singapore and the Social Security System.
Dividends
He also said a portion of the P900 million could have been apportioned to pay WPI stockholders with either cash or stock dividends.
“If naay pautangon, it should be the stockholders. Di man gani mi maka-enjoy ug maski free parking man lang,” said Lim, adding that even if he was among the top 18 shareholders, he has not enjoyed in full any shareholder’s benefits.
“Pay off the loans first before lending,” said stockholder William Liu Jr., Primary Structures president.
“We are not a bank, the purpose of a hotel is to run a hotel, not loan money,” he added.
In an interview after WPI’s stockholders’ meeting at the Waterfront Cebu City Hotel and Casino (WCCHC) last Saturday, WPI chairman Renato Magadia said the P900 million loan is a “normal internal transaction.”
“The most important thing is that our obligation to the bank is not jeopardized… and fixed maturity is paid on time,” he said.
Deficit
He said the company was unable to provide cash or stock dividends this year because WPI “is still on deficit.”
Magadia said WPI is still regaining losses incurred during the first six years of its operation.
It was only in the past three years, he said, that figures showed positive results.
WPI reported that revenues from hotel operations in 2006 increased to P1.85 billion from the P1.79 billion in 2005.
Total group room revenue (revenue of all hotels of WPI) last year rose to P652 million in 2006 from P646 million in 2005, while food and beverage revenues jumped seven percent higher or P673 million.
WPI earned a consolidated net income of P18.24 million.
The Gatchalian-led hotels in Cebu — WCCHC and Waterfront Airport Hotel and Casino (WAHC) — showed growth in room and food and beverage revenues.
Last year, WCCHC, Waterfront Hotels and Casino’s flagship property, registered P269 million in room revenues while food and beverage revenues rose to P300 million.
WAHC earnings from room accommodations grew 3.8 percent higher or P84 million compared to P81 million in 2005. Food and beverage revenues increased by 25 percent from P56 million in 2005 to P70 million in 2006.
