'Pryce Plans is solvent but trust fund's illiquid'


Posted at Feb 15 2009 02:15 PM | Updated as of Feb 15 2009 11:31 PM

Pryce Plans Inc. remains solvent but is barely able to pay its obligations to plan holders in cash because its trust fund is illiquid, according to the Securities and Exchange Commission (SEC).
In a letter to Sen. Manuel Roxas II, SEC acting director for Non-Traditional Securities and Instruments Department Jose Aquino said the commission's conclusion is based on trust fund reports submitted by Pryce Plans' trustees, ChinaBank and Asiatrust Bank.

The SEC also noted that Pryce Plans has a trust fund deficiency of P56.17 million since it only has reserves of P113.23 million, consisting of listed equities and a little cash, as against the required 20 percent reserve of P168.4 million.
Aquino noted that the firm has chosen to deal with its obligations to plan holders by giving them the option to avail of the cash settlement or dacion en pago, provided the consent of the availing plan holder is secured.
The dacion includes liquefied petroleum gas (LPG) from sister company Pryce Gases Inc., medicine from another sister company Pryce Pharmaceuticals Inc., and memorial lots provided other Pryce companies.
For those availing the swapping option, their maturity benefits are in effect converted into capital for dealership of LPG or medicines which are given immediately to them upon their assent.
However, for those who want settlement in cash, the SEC said Pryce Plans is implementing a "queuing program" due to the illiquidity of the assets of its trust fund.

Pryce Plans has assets of P1.28 billion as of the end of 2008 as against total liabilities of P974.56 million. The firm's assets have shrank by 31.7 percent from 2004 when its total assets amounted to P1.87 billion.
As of the end of 2008, Pryce Plans' trustee banks reported a total trust fund equity of P846.99 million, of which P590.73 million is for educational plans while P256.26 million is for Pension plans.
However, the cash portion of these trust funds amounted to only P106,839.00 or a mere 0.01 percent of total trust fund.

This is because the bulk of these trust funds have been invested in real estate, primarily condominium units (P518.45 million), and memorial lots (P216.84 million) as well as some in listed equities (P113.12 million).