Pension fund Social Security System has joined other creditors of Benguet Corp. in declaring the financially troubled mining company in default.
Benguet said in a disclosure to the Philippine Stock Exchange that it received a letter from Philippine National Bank, the trustee of bank creditors, informing it that SSS declared the mining company in default because of its failure to pay loans due to the pension fund.
Benguet did not say how much it owed SSS. The company, owned by the Romualdez family, owes a total of P1.2 billion to creditors.
Other creditors that earlier declared Benguet in default were Investment 2234 Philippines Fund 1 (SPV-AMC) Inc., Calyon Credit Agricole CIB, Philippine Distressed Asset Asia Pacific (SPV-AMC) 1 Inc., Bank of America, Marathon Master Fund Ltd. and Asset Pool A (SPV-AMC) 1 Inc.
Benguet claimed that loan agreements with creditors called for certain procedures to follow before a default could be declared. It cited a provision requiring majority of the creditors of record to declare and collectively send a formal declaration of default.
Benguet said a validation process was still ongoing to determine the creditors of record after several of the original lenders sold their loans to special purpose vehicles, or SPVs.
“In this light, SSS’ notice of default is not effective and does not comply with the declaration referred to in the loan agreements,” Benguet said.
It noted that it made a recent offer to settle the debt with PNB.
Benguet earlier said it was considering three options to settle the debt, namely in the form of cash, a dacion en pago arrangement or a combination of both.
The PSE suspended the trading of Benguet shares for one month and penalized the company for failing to disclose that it received several notices of default from creditors. PSE said the default notices were material information.
