Group eyes blocking sale of Pacific Plans
By Lala Rimando, abs-cbnnews.com/Newsbreak | 01/21/2009 1:16 PM
ABS-CBN News Online
An organization of some Pacific Plans Inc. clients is considering blocking the sale of the embattled pre-need firm to an interested buyer.
Key officers of Parents Enabling Parents (PEP), a vocal and well-organized association of Pacific Plans’ traditional educational planholders, told abs-cbnnews.com/Newsbreak that when they learned about the sale of the pre-need firm yesterday, their knee-jerk reaction was to go to the court and stop the transaction.
“We want to get a [temporary restraining order] to stop that sale,” Philip Piccio, PEP’s head said in a phone interview.
Piccio said they are meeting their lawyers today to map out their legal and other strategies given the recent corporate changes in Pacific Plans, which is currently under rehabilitation.
PEP is likely to question why Pacific Plan’s buyer—Abundance Providers and Investments Corporation (APIC), led by an ex-aviation businessman—did not consult with the court-appointed receiver of Pacific Plans.
Piccio described the announcement of the sale as a “mockery of the rehabilitation process,” since he noted that any new development or plan should have been coursed through the rehabilitation court.
“There is a judicial process for these transactions. The sale caught us by surprise. That should have not been the case. If they (APIC) are true buyers, they should have done their due diligence, learned that this company has pending liabilities under the oversight of the court, and should have asked the court-appointed body first,” the irked Piccio said.
Vic Ortuoste, PEP’s finance expert, added that “Our claim as planholders against Pacific (Plans) will stay regardless of who the owners are.”
On January 20, APIC notified the Securities and Exchange Commission, the government agency that supervises pre-need firms in the country, that it has acquired the entire stake of a Yuchengco unit that owned Pacific Plans.
The P250 million transaction effectively removes the pre-need firm from the portfolio of companies owned or managed by the elite Yuchengco family.
PEP has been active in besmirching the Yuchengco’s reputation after the previously lucrative educational pre-need plans turned out not to be financially viable.
PEP members are those with traditional educational plans, or those that promised full tuition fee coverage. In the 1990’s, however, a deregulation law led to skyrocketing school tuition rates, far outpacing the growth of investment rates.
Pacific Plans then stopped offering traditional pre-need plans, and sold only fixed plans, or those which promised to cover only the tuition fees that match the growth of the company’s investments.
In 2005, the Yuchengcos tried to split Pacific Plans into two companies—one with the non-viable traditional plans and the other with the viable fixed plans. The SEC blocked the split, citing that this move effectively disadvantaged those with traditional plans since the company’s healthy trust fund reserves would have been removed from the pool of funds to reimburse them.
In the recent letter of APIC to SEC, it said it would continue to serve all three products of Pacific Plans—educational, pension, and memorial—but it would focus the business more on the memorial products, or those that would cover death-related expenses of a client.
For the educational plans, APIC wrote that under the new management, it would “continue to respect and implement the rehabilitation plan approved by the regional trial court.”
PEP is still questioning the rehabilitation plan and has raised the case to the Supreme Court, which is yet to issue a final decision.
as of 01/22/2009 11:53 AM
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