SEC opposing TPG Corp. proposal

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SEC opposing TPG Corp. proposal
Posted: 2:12 AM | Apr. 12, 2006

Inquirer

THE Securities and Exchange Commission is opposing a proposal of pre-need firm TPG Corp. to suspend payment of its obligations to holders of open-ended education plans.

 

It proposed liquidation of TPG if there was no viable option for addressing its financial problems.

 

The commission gave its comments, through its counsel, the Office of the Solicitor General, to the Makati City Regional Trial Court on April 6, and said TPG should continue to honor its obligations, noting that pre-need plans were contracts between the company and its plan holders.

 

"These plans cannot be unilaterally amended without the consent of the plan holders," it said. "The proposed rehabilitation, if approved will certainly violate the concensual nature of contracts. As such, it cannot be enforced on the parties who do not consent to it."

 

The SEC said TPG's proposal for a program to convert pre-need plans into company -- which is the crux of its rehabilitation scheme -- was not submitted for its approval.

 

It said the proposal was disadvantageous to the plan holders.

 

"The latter have the right to recover their investments but are not under any obligation to have their investments converted into shares of stock by force and against their will," it said. "Besides, who would want to invest in an ailing company?"

 

TPG has outstanding and lapsed open-ended plans worth P2.0 billion, out of the total issued plans of P6.5 billion as of December 2004.

Open-ended education plans offered to cover tuition costs of beneficiaries regardless of the amounts. The SEC banned their sale in 2002 after the government deregulated tuition increases.

 

The SEC said that TPG's financial statement as of the fourth quarter of 2005 showed liabilities exceeding liquid assets.

 

Since 1999, TPG has also failed to comply with SEC's trust fund deposit requirements.

 

In 2004, TPG availed itself of a five-year SEC leeway program hoping that all its trust fund deficiencies would be addressed in time.

 

The SEC said that in the first year of the program, TPG incurred deficiencies in its monthly payments. The company stopped payments in 2005.

 

The SEC also found that TPG issued more education plans than was approved and continued giving cash advances to its affiliates despite its trust fund shortfall.

 

TPG argued in letters to the SEC that the commission had cleared the alleged over-issuance of plans after TPG paid penalties.

 

It also said its trust fund deposits for education had excess contributions of P2 billion.

 

It said the delays in its deposits for its pension trust fund was due to long standing accounts from LBC Express Inc. With INQ7.net