053107: Makati Medical Center on road to financial health

May 31, 2007
Updated 05:57:39 (Mla time)
Elizabeth Sanchez-Lacson
Inquirer

Medical Doctors Inc., the operator of the Makati Medical Center, the hospital in the country's top business district, is on track to full financial recovery after sealing an agreement with banks to restructure P1.2 billion in loans, a company official said.

The agreement, signed May 4, gives Medical Doctors a three-year moratorium on payment of principal debt and extends the loan payment period to eight years, said Carlito Soliman, Medical Doctors director for finance.

The government's Development Bank of the Philippines is the biggest creditor of Medical Doctors. Other creditors include Rizal Commercial Banking Corp., Security Bank Corp., state-owned Land Bank of the Philippines and the state-run pension fund Social Security System.

Medical Doctors started having cash flow problems in 2004, mainly because of high operating costs and inability to collect payments, which hampered its ability to pay maturing debts. It stopped bleeding financially in 2005 with the entry of the Metro Pacific group led by Manuel Pangilinan, who became chairman of Medical Doctors and was directly involved in restructuring the hospital's systems and operations.

As of last year, for instance, Medical Doctors had cut its workforce by 15 percent to reduce operating costs.

Due partly to these changes, Medical Doctors recorded a 248-percent rise in net income to P80 million in January-April 2007 from P23 million in the same period last year. Gross revenues grew 21 percent to P941 million from P776 million.

“At this stage, we are very bullish that we can surpass our full-year [2006] income of P223 million,” Soliman said.

Medical Doctors is spending roughly P1.6 billion to construct a building that will house outpatient services, to renovate the present hospital building and to buy new medical equipment.

To help finance the expansion and renovation, Medical Doctors issued convertible notes to existing and new investors, raising P961 million in fresh funds.

Metro Pacific Investments Corp., a holding company headed by Pangilinan, subscribed P750 million worth of notes. On conversion of the notes into shares, it will end up owning 32.5 percent of Medical Doctors.

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