Metro Pacific 2001 Results

RNS Number:2469S
First Pacific Capital (1997) Ld
1 March 2002



FIRST PACIFIC COMPANY LIMITED

PRESS RELEASE

Friday, 1 March 2002

METRO PACIFIC CORPORATION ANNOUNCES 2001 RESULTS


The attached press release was distributed today by Metro Pacific Corporation,
in which the First Pacific Group holds an economic interest of 80.6 per cent.


Metro Pacific, which is based and separately listed in Manila, has interests
principally in Property (Bonifacio Land Corporation, Landco Pacific and Pacific
Plaza Towers). Further information on Metro Pacific can be found at http://
www.metropacific.com/

                                     * * *

For further information, please contact:

Metro Pacific Corporation

Augie Palisoc Jr.

Tel: [phone]

David Nugent

Tel: [phone]

Information about First Pacific can also be accessed on:

Web Site: www.firstpacco.com

Email: [e-mail]







                           Metro Pacific Corporation

                                                           FOR IMMEDIATE RELEASE

                METRO PACIFIC CORPORATION ANNOUNCES 2001 RESULTS

BONIFACIO GLOBAL CITY, 1 March 2002 - Metro Pacific Corporation ("MPC") (PSE:
MPC) today announced an unaudited consolidated operating loss of P3.985 billion
in 2001. In addition, asset impairment provisions totaling P19.2 billion were
made. MPC also announced today a major debt reduction exercise that it is
undertaking with its various creditors.


MPC emphasizes that these asset impairment provisions are exceptional and
non-cash in nature and neither impact what management believes to be the
longer-term value of MPC's investments in the Bonifacio Global City, nor its
ongoing debt reduction efforts.


The provisions are consistent with MPC's conservative approach and establishes
book values more in line with the current softness of the Philippine property
market. More importantly, it enables MPC to return to profitability assuming
future land sales in the Global City are in line with prices at which recent
land transactions have been concluded, which are significantly higher than the
post-provisioning reduced cost base.


The major component of MPC's 2001 consolidated loss relates to asset impairment
provisions of P19.2 billion, of which P16.6 billion is attributable to MPC's
carrying costs of its 69.6% investment in Bonifacio Land Corporation ("BLC").
BLC has a 55% investment in the Fort Bonifacio Development Corporation ("FBDC"),
developer of the Bonifacio Global City.


With this exercise, MPC has eliminated all remaining unamortized capitalized
costs including interest, foreign exchange losses, and goodwill with respect to
its investments in the Fort Bonifacio Global City. More importantly, it also
made additional provisions equal to the development costs in the Global City,
effectively reducing its value of the raw cost of land to the original P33,284
per square meter price purchased from the Government in 1995. Accordingly, the
carrying cost of MPC's investment in BLC has been written down from P30.2
billion to P13.6 billion.


MPC also reduced the value of its investment in Nenaco by P520 million, bringing
its actual book value from P1.4 billion to P920 million. The rest of the
provisions relate mostly to other development properties.


The result of these provisions reduces MPC's total consolidated assets to P68
billion as at December 31 2001, financed by shareholder's equity including
minorities of P39.8 billion and total consolidated liabilities of P28 billion,
of which P18.5 billion are interest bearing.


2001 Operating Performance by Individual MPC Business


  • FBDC, MPC's principal investment, ended 2001 with a net loss of P630
    million, compared with a 2000 net income of P745 million.




    Several income generating lease agreements for sites within the Global City
    were signed during 2001, building a foundation for future sustained income.
    A major national medical center, St. Luke's, signed a 50-year lease
    arrangement for a 1.6 hectare property. The mid-market retail complex
    Bonifacio Stopover, which opened in mid 2001, achieved a 100% occupancy
    rate, with plans to develop a second phase of the project in 2002. The
    HatchAsia office complex was completed in 2001 and is now 70% leased. A
    major land sale was concluded for P2.5 billion in early 2002 for a prime
    property adjacent to the Manila Golf Course that will be developed into a
    large mixed-use complex for residential and retail use.


    Significant progress was made in the Bonifacio Global City's residential
    developments. Completion of the Pacific Plaza Towers and Essensa complexes
    enabled the city to host its first residents. Progress is being made on
    other high-rise residential projects, Bonifacio Ridge and the Regent
    Parkway.


  • Landco, the leisure property development subsidiary of MPC, posted a
    consolidated net profit of P38 million, from P34 million in 2000. Its Punta
    Fuego luxury development was sold out by end 2001, and accelerated
    development has begun on two nearby luxury resort projects.




  • Negros Navigation Company ("Nenaco"), MPC's container and passenger
    shipping subsidiary, reported an operating loss of approximately P400
    million, P200 million of retrenchment costs and, in line with MPC's
    conservative approach, likewise recorded one-time non-cash provisions of
    P1.2 billion. These represent provisions for investments in its fast ferry
    affiliate, reducing the book values of certain ships, and stock write-offs.
    Nenaco has exhibited clear signs of its turnaround in 2001, as this was the
    first year that it did not require cash support from MPC.




  • MPC (parent company alone, excluding subsidiaries) reported an operating
    loss of P 1.6 billion, comprising mostly interest expenses on its P12
    billion company debt and overhead expenses. MPC's signature high-rise
    residential development contributed sales of P2.6 billion during 2001.
    Despite continued weakness in the luxury residential condominium market, the
    project sustained sales interest, with approximately 77% of the 393 units
    now sold.




MPC's Debt Reduction Efforts

On 9 January 2002, MPC and its major shareholder, First Pacific Company Limited
("First Pacific") of Hong Kong, announced that MPC was unable to repay on 31
December 2001 a US$ 90 million loan it received in April 2001 from a wholly
owned subsidiary of First Pacific. MPC had stated it had initiated development
of a plan to reduce its total parent company financial obligations of P12
billion, of which approximately P5 billion represents the peso equivalent of the
First Pacific loan, and that such plan would be announced by 28 February 2002.


As part of the plan's development, MPC conducted an extensive review of all its
financial obligations, both secured and unsecured, and the values of all its
assets and those of its subsidiaries. This exercise confirmed that, while MPC is
presently unable to repay the First Pacific loan as well as certain other loan
obligations that matured earlier this year, MPC has more than sufficient asset
values to cover its liabilities.


MPC has developed alternative debt reduction approaches, which it continues to
discuss with its creditors on a bilateral basis. The plan intends to balance all
stakeholder interests. It includes the possible sale of certain assets to
specific creditors for immediate relief. It contemplates the use of unencumbered
assets to possibly secure certain debts that may not be secured. MPC will also
request extended grace periods for interest and principal repayments, lower
interest rates, and the conversion of short term loans into longer term
facilities. The plan also allows conversion of certain debts into equity in
individual group businesses, for those creditors who share management's belief
in the inherent, long-term value and potential of these companies. Another
important component of the plan is to work with creditors to free up saleable
assets in order to provide immediate liquidity for MPC's operating cash
requirements, and secure debts instead with other assets, mostly properties,
that could be developed to generate enhanced values. This will provide a bigger
source of cash that will be used to retire debt and fund MPC's operations moving
forward. The ongoing and systematic consultations with all creditors are being
done with a view towards finalizing MPC's overall debt reduction solution and
arriving at a rational debt restructuring plan.


While the sale of MPC's shares in BLC will continue to remain a debt reduction
option, management efforts will focus on enhancing and realizing the values of
its investments in the Bonifacio Global City.

Experienced Management Team Leads Restructuring Efforts

As recently announced, after the resignation of Mr. Ricardo S. Pascua as MPC
Group President at the end of 2001, Mr. Manuel V. Pangilinan assumed the roles
of MPC President and CEO.


The MPC management team was further strengthened in early 2002 by the addition
of Mr. Edward A. Tortorici and Mr. Augie Palisoc Jr., both long-serving senior
officers of First Pacific Company Limited of Hong Kong, both with extensive
international restructuring experience. Mr. Tortorici, Executive Director of
First Pacific, recently joined MPC's Board of Directors. In 1998, Mr. Palisoc
presided over the turnaround of then-MPC subsidiary, Steniel Manufacturing
Corporation. They are working closely with Mr. Jose Maria Lim, MPC's Chief
Financial Officer.


MPC has also appointed EGF and Associates, a well-respected local finance
organization that specializes in debt restructuring, as its financial advisor.
EGF's Managing Partner, Mr. Eric G. Filamor, has successfully restructured
several large Philippine companies, including cellular provider Pilipino
Telephone Co. Ltd. (PILTEL). MPC also continues to engage the Picazo Law
Offices, who are experienced in corporate restructuring exercises.


Group Operations to Continue During Restructuring Period

MPC stresses that individual business operations of the group will remain
largely unaffected during the restructuring period. Sales of its premier
high-rise development continue apace with a total of 304 units sold thus far. A
significant number of new leases and new projects are on schedule in the
Bonifacio Global City including an expansion of the Bonifacio Stopover complex
to include many new restaurants, and the construction of the MC Home Depot
complex on a 2.6 hectare site. Landco continues the development and sales of new
high-end resort projects, including Terrazas de Punta Fuego. Nenaco will
continue to accelerate its turnaround and augment improvements made in 2001.


Comments on 2001 Results and Restructuring

"We firmly believe that the vast majority of the MPC creditor base recognizes
the inherent values of our assets, which are significantly higher than our
overall debt. The immediate challenge for MPC is to work hand in hand with its
creditors, who understand the difficulties of today's Philippine property
market, and protect the long term value of the Global City. I am confident that
our individual businesses will weather this current climate, and emerge stronger
and better positioned to benefit from an upturn in the economy and the real
estate sector," said MPC Chairman Manuel V. Pangilinan.


                                     * * *



                                             METRO PACIFIC CORPORATION
                              CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
                                                    (Unaudited)

For the period ended 31 December
(In thousand pesos)                                               2001                2000               1999
Revenues                                                             6,860,124          9,826,087          9,830,507
Cost of sales                                                      (5,513,966)        (6,883,132)        (6,843,280)
Operating expenses                                                 (1,183,443)        (1,196,801)          (953,459)
Operating profit                                                       162,715          1,746,154          2,033,768
Equity in net losses of affiliated companies                         (525,541)          (308,014)          (425,492)
Financing charges, net                                             (2,245,379)        (1,271,790)        (1,031,858)
(Loss)/profit before other expense                                 (2,608,205)            166,350            576,418
Other expense, net                                                (24,515,728)        (1,947,828)          (719,954)
Loss before taxation                                              (27,123,933)        (1,781,478)          (143,536)
Taxation                                                               344,625          (726,041)           (69,862)
Loss from continuing operations                                   (26,779,308)        (2,507,519)          (213,398)
(Loss)/gain from discontinued operations                              (11,274)          4,895,984          3,687,027
Net (loss)/income before outside interests                        (26,790,582)          2,388,465          3,473,629
Outside interests                                                    3,579,873          (154,720)        (1,069,785)
Net (loss)/income for the period                                  (23,210,709)          2,233,745          2,403,844
(Deficit)/retained earnings
     Beginning of period                                             6,941,959          4,781,231          2,413,387
     Dividends accrued on preferred shares                           (175,213)      (73,017)                (36,000)
     End of period                                                (16,443,963)          6,941,959          4,781,231
(Loss)/earnings per share (in centavos)                               (125.71)              11.62              13.25
Weighted average number of shares in issue                          18,603,473         18,598,898         17,868,139







                                           METRO PACIFIC CORPORATION
                                          CONSOLIDATED BALANCE SHEETS
                                                  (Unaudited)
As at                                                                       31 December         31 December
(In thousand pesos)                                                            2001                2000
ASSETS
Current assets
    Cash and cash equivalents                                                       961,558           1,560,407
    Receivables                                                                   5,208,026           6,786,668
    Due from affiliated companies                                                   947,381           2,262,678
    Inventories                                                                      68,285             202,899
    Development properties held for sale                                         12,574,107           6,614,775
    Prepayments and other current assets                                          5,070,298           4,379,639
    Deferred income tax asset -net                                                  327,462             115,729
          Total current assets                                                   25,157,117          21,922,795
Long-term receivables                                                               729,164           1,692,054
Investments in affiliated companies                                               1,177,502           2,884,751
Development properties                                                           30,375,795          57,465,132
Property, plant and equipment                                                     5,954,466           5,887,615
Goodwill                                                                                  0              19,997
Other assets                                                                      4,436,310           4,574,589
Total assets                                                                     67,830,354          94,446,933
LIABILITIES AND EQUITY
Current liabilities
    Loans and notes payable                                                       9,571,069           4,533,891
    Current portion of long-term debts                                            2,941,414           7,576,253
    Current portion of long-term liabilities and provisions                         951,775           1,884,604
    Accounts payable and accrued expenses                                         6,650,382           4,946,088
    Income tax payable                                                               20,784               4,603
          Total current liabilities                                              20,135,424          18,945,439
Long-term debts                                                                   6,027,773           4,327,272
Long-term liabilities and provisions                                              1,906,198           2,912,311
Equity
    Stockholders' equity
          Capital stock                                                          18,606,695          18,602,120
          Additional paid-in capital                                             10,411,914          10,407,065
          Treasury stock                                                        (1,033,000)         (1,033,000)
          Retained earnings                                                    (16,443,963)           6,941,959
    Outside interests                                                            28,219,313          33,343,767
Total equity                                                                     39,760,959          68,261,911
Total liabilities and equity                                                     67,830,354          94,446,933




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