Pacific Plans owner offers to buy plans

By Doris Dumlao
Philippine Daily Inquirer
First Posted 19:56:00 02/03/2009

MANILA, Philippines — The new owner of Pacific Plans Inc. (PPI), investment banker Noel Oñate, made on Tuesday a bold offer to redeem all the pre-need plans previously sold by the troubled company, promising to return the money to the planholders plus interest.

Oñate and officials of his Abundance Providers Investments Corp. (APIC) met planholders to discuss the buyback offer, which he said was necessary as the “first step away from acrimony and hate.”

“Our dialogue with the planholders made us realize that there are those who have an urgent need for their hard-earned money in these difficult times,” Oñate said at a meeting with planholders at the Manila Polo Club. “In response, we shall offer to planholders to buy back their plans and return what they have paid to PPI plus interest. In that way, no planholder will lose a dime of their investment paid to PPI.”

The meeting included members of the Parents Empowering Parents Coalition, some of whose members have run after the company’s former owner, the Yuchengco family.

“Our plan to turn around PPI is a work in progress,” APIC director Rita Linda Jimeno said. “This is only the first in a series of dialogues we are having with our planholders. We want them to be our partner in finding ways to turn around this company.”

Oñate said his group was committed to having an open mind not only in their dialogue but in the way the corporation would be managed. He called on the planholders to move away from a confrontational and adversarial engagement and move into a more “constructive” and “collaborative” partnership.

The Yuchengcos sold PPI, lock, stock and barrel, for P250 million in December to Oñate, who had cashed out of Asian Spirit, an airline he had co-founded.

PPI, which with about 300,000 planholders is one of the biggest pre-need companies, was hit hard by surging costs of servicing open-ended educational plans when the government liberalized tuition rates in the 1990s. Before that, the government capped tuition increases at 10 percent a year.

At the meeting Tuesday, Oñate discussed what he called the “core business principles” guiding the rehabilitation of PPI and outlined a “10-point action plan” to turn the company around.

In earlier statements, he projected a financial turnaround in two to three years.

“I am an entrepreneur and I am proud to have had some successful ventures in my career,” he said at the meetingTuesday. “From my early days as an investment banker until I started a small airline that pioneered the business model now being used by other thriving budget airlines in our country, I have always believed in thinking outside the box … I believe in looking toward the future instead of dwelling in the past.”

Oñate said he saw an opportunity when he found out that the Yuchengcos were thinking of selling the company.

“With trust assets amounting to P12.5 billion, a steady stream of corporate earnings, and a highly professional staff, I saw the intrinsic value in the company and believed that the challenges it faces can be overcome in time,” he said. “I saw the more than 300,000 planholders of Pacific Plans and its nationwide sales force of more than 10,000 committed and motivated agents as a source of its strength.”

Oñate said that under his plan of action the new management would stick to the court- approved rehabilitation plan and continue to honor legal obligations under the plan for open-ended educational plans.

“Upon the maturity of the securities comprising the trust assets covering these plans presently valued at P2.3 billion next year, APIC is committed to pay off the traditional plan holders their proportionate share in the trust assets in US dollars which is projected to appreciate in the coming months,” Oñate said.

“Traditional planholders stand to benefit from a more favorable currency exchange rate anticipated by most financial analysts,” he said.

Other components of the action plan according to APIC:

• APIC will ensure that the trust funds with present consolidated value of P12.5 Billion are prudently managed with focus on maximizing their proceeds;

• In anticipation of an improving business climate, the new management will re-engineer offerings, possibly with terms of three to five years that will allow for more effective liability-directed investment management of corporate assets. (At present, it has already discontinued the sale of products in its inventory that were priced using high hurdle rate assumptions of up to 18 percent but continued servicing them)

• In tandem with an improving economy, APIC will conduct an aggressive marketing campaign to sell new offerings and exert greater effort in pushing fixed-value educational, pension and memorial plans. New branches will be set up in the Visayas and Mindanao;

• To signify a “clean break” from the past, PPI will do business under a new name: Abundance Providers Entrepreneurs Corp. (APEC);

• APIC will explore cross-selling opportunities of other products to optimize the value of a 10,000-strong nationwide sales force;

• It will study ways to further streamline operations and generate savings on our operational costs;

• It will evaluate prospective trustees and consider transferring the trust funds (now with the Yuchengco group’s Rizal Commercial Banking Corp.) to other trustee banks;

• It will continue to infuse professional management into the company and mandate a cap on the salaries of corporate officers;

• While working on the early recovery of the company, it has vowed not to distribute any dividends to shareholders; and,

• It will work closely with regulatory agencies and the Philippine Federation of Preneed Companies (PFPCI) to address industry-wide issues and brace against the impact of the global financial crisis. With editing by INQUIRER.net