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Tuesday, November 11, 2008
PNB seeks to foreclose Waterfront hotels
By Katrina A. Balmaceda
Correspondent
CEBU CITY -- The Philippine National Bank (PNB) is seeking the foreclosure and sale of two of Cebu's major hotels due to a debt of about P740 million.
These are Waterfront Cebu City Casino Hotel Inc. and Waterfront Mactan Casino Hotel Inc., which are owned by Waterfront Philippines Inc. (WPI).
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WPI owes PNB a balance of P739,600,000 out of P1 billion, not including interests and penalties.
But in a press statement, WPI called PNB's move "premature" and said the company still stands strong.
"The tourism industry has continuously experienced growth and as such, the company's cash flows have been steadily healthy," read WPI's statement.
WPI chairman Renato Magadia, however, admitted in a phone interview with Sun.Star Cebu that it has been postponing its monthly payment to PNB ever since last February.
From February 2008 to November 2008, WPI would have paid P80 million but was not able to do so, said Magadia.
This is because of ongoing "lengthy negotiations" regarding the terms of the contract renewal of Philippine Gaming and Amusement Corporation (Pagcor), its major leasing client.
But WPI is now ready to resume payments and will seek an amicable settlement with PNB, Magadia said.
When asked if it was true that Waterfront Mactan will be publishing a notice of sale by Friday, Magadia replied, "I don't think so."
WPI listed the two hotels under mortgage when it took out the loan with PNB, according to the bank's petition for the extra-judicial foreclosure of the two hotels.
The petition was filed at the Cebu City Regional Trial Court (RTC) last Tuesday, November 4. It sought the public auction sale of WPI's mortgaged properties.
Among the items described in WPI's Mortgage Trust Indenture (MTI) was "Waterfront Cebu City Hotel Project and its improvements, fixtures, machineries and equipment." This is the hotel on Salinas Drive in Lahug.
It also included the leasehold rights and interests of WPI in relation to the contract of lease between Mactan Cebu International Airport Authority (MCIAA) and Waterfront Hotel and Resort.
The contract covers 4.6 hectares of land registered under the MCIAA at the former airport in Lahug. The land was assigned to Waterfront Cebu City Casino Hotel Inc.
The petition also attached WPI's promissory note that stated it would pay the total amount of P1 billion from the period of March 1, 2004 to December 31, 2008.
However, PNB noted that as of October 23, 2008, WPI still owed the bank P744,946,053.07, an amount that still excludes penalties, expenses, charges and 10% attorney's fees.
WPI, in its press statement, said it already paid over P1.2 billion in interest. Magadia added that WPI is now ready to reinstate its monthly payments after negotiations with Pagcor.
"The lease negotiations have now resulted in a favorable outcome and the company now confirms verifiable cash flows to meet its upcoming loan commitments to the bank," said WPI.
Magadia said PNB's move caused "shock and disbelief." The last time WPI had a discussion with PNB was middle to late October and PNB did not mention any petition for foreclosure.
"The hotel's asset values have been more than sufficient to dispel any doubts on the company's ability to cover the entirety of the obligations," WPI's statement read.
If a foreclosure occurs, at least 1,000 employees in both hotels could be affected. (Sun.Star Cebu)
For more Philippine news, visit Sun.Star Cebu. (November 11, 2008 issue)
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