SSS CHIEF DEFENDS SALE OF EQUITABLE PCI STAKE TO BANCO DE ORO
MANILA, January 13, 2004 (STAR) By Pia Lee-Brago - The proposal from Banco de Oro to purchase the shareholdings of the Social Security System in Equitable PCI Bank offers the institution a rare opportunity to recover and realize a return from a low-performing investment, SSS president Corazon de la Paz said yesterday.
De la Paz explained that the offer of business tycoon Henry Sy to purchase the entire SSS ownership of the bank for P14 billion was the highest market price since 2002.
"Holding on to the shares precludes the opportunity for SSS to invest the potential proceeds in safe and higher yielding instruments. This opportunity is magnified in the current rising interest rate environment," De la Paz said.
She added that the proposal involves the purchase of 188 million shares at P43.50 per share, which is 30 percent higher than the last trading price of P33.50.
Equitable PCI Bank was trading at a low of P16 per share in 2001 to a high of P33.50 last December.
SSS is carrying the investment in Equitable PCI Bank in its books at P14.2 billion. It is expected to SSS chief recover the amount under the deal, which is a combination of cash and six and a half year term secured promissory notes.
According to De la Paz, Banco de Oro’s offer would allow the SSS to recover its acquisition costs for the shares and use the money to generate earnings that would benefit the institution and its 25 million members.
She said SSS has not received any dividends from the shares since four years ago and the deal offered an opportunity for SSS to improve its investment portfolio, which could lead to better viability for the fund.
"We want to make sure the deal would be advantageous for the SSS and Equitable PCI Bank. It should be a win-win deal. We want to recover our investment and generate earnings, but we also want a strong party to come in and help build an even stronger bank," De la Paz said.
De la Paz said investment bankers and financial analysts have hailed the transaction as a good deal for the SSS.
Reported by: Sol Jose Vanzi
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