Sunday, October 05, 2008 Group sees bankruptcy of Lopez firms
A CONSUMERS group on Saturday warned of a possible bankruptcy of the Lopez Group of Companies due to more than P120 billion in debts, which will mature this November.
The National Association of Electricity Consumers for Reforms (Nasecore) aired the warning amid continuing fears of a global meltdown due to the US financial crisis.
"The self-proclaimed corporate geniuses of the Lopezes must be wracking their brains now on how to fend off their creditors," said Nasecore president Pete Ilagan.
Ilagan said that with interest rates at their highest due to lingering fears of a US economic meltdown, the creditors of the Lopezes would surely have depressed appetites for the re-structuring of the loans.
"Do not look now but the Lopez companies may turn turtle, even without considering their possible investment exposures in such US companies like Lehman Brothers and AIG," he added.
Ilagan stressed that Nasecore's concern on the Lopez Group of Companies under its umbrella organization First Philippine Holdings (FPH) has to do with the possibility of the assets of Lopez-controlled power utility firm Manila Electric Company (Meralco) being misappropriated.
"Meralco consumers will ever be watchful lest some people may do a Harry Houdini - or a disappearing act - with Meralco funds, despite the Lopezes having only a minority stake in Meralco," Ilagan said.
Based on the Lopez group's total exposure as of September 22, 2008, analysts say that the P6.2 billion proceeds of FPH's sale to Metro Pacific of its 51 percent stake in the toll road company FPIDC would hardly "scratch its huge debts."
The Lopezes sold to Metro Pacific their stake in FPIDC despite better offers from San Miguel Corporation (SMC) and Filinvest Dev't, leading observers to conclude that Metro Pacific had pledged to immediately pay FPH.
"The Lopezes are in a deep hole from where they may not be able to dig themselves out. Debt rollover may not be palatable to their creditors, considering the current sour state of investment affairs, and the Lopezes' bad track record," the Nasecore president said.
Ilagan also cited published reports of FPH's finance cost doubling to P2.5 billion from P1.28 billion "due to the increase in its debt level," and FPH's booking of foreign exchange losses of P3.5 billion in the first quarter of the year.
"Only they exactly know how many billions they owe and how many billions are falling due. But our computations would put its maturing debts next month to at least P120 billion," he said.
vA unit of FPH, First Gen, will have some US$800 million of short-term debt due between now and May 2009. Even if the company is able to raise $700 million from its Sta. Rita plant, the $300 million expected to flow to First Gen will not be enough to cover $400 million in loans maturing this November.
According to Ilagan, the Lopezes may very well use their stake in Meralco so they can meet maturing loans.
He, however, said this would be very unlikely because Meralco serves as the "milking cow" of other Lopez companies.
"The companies wholly owned by the Lopezes have no clients other than Meralco, to which they sell transformers, cables, poles, services, etc. So these Lopez companies are, in fact, like leeches, feeding off the lifeblood of Meralco," he said. (AH/Sunnex)
