Makati Med’s P1-B debt restructuring approved
Following its rosy financial performance
in 2006, the Medical Doctors Inc., the operator of Makati Medical
Center, has secured the approval of creditors for the restructuring of
some P1 billion in debts.
Makati Med Finance Director Carlito Soliman said in an interview
yesterday that the restructuring agreement was signed by the hospital
and its creditors on Friday last week.The signing of the agreement comes two years after the company — which posted a 14-fold increase in its net income in 2006 — asked creditors to extend the maturities of its obligations due to cash flow constraints.
Mr. Soliman said that under the restructuring agreement, the maturities of the company’s short-term and long-term obligations were extended up to eight years. For the first three years, the company will need to make only interest payments. Payment of the principal loan amount will start on the fourth year and will be spread over five years.
"Everything’s going the way it’s planned," Mr. Soliman said.
Medical Doctors operates, manages, and owns Makati Med. It also wholly owns the Remedios T. Romualdez Memorial Schools, Inc. and holds a 60% stake in Computerized Imaging Institute Inc., which maintains a tomography center.
The firm earlier tapped ATR-Kim Eng Capital Partners Inc. to put in place a business plan to address its cash flow constraints.
The company obtained the loans from 1998 to 2004 for additional working capital, as well as for the expansion and upgrading of medical equipment, audited financial statements show.
Of the P370.248 million in short-term obligations, P190 million was secured from Land Bank of the Philippines; P156.65 million was from the Rizal Commercial Banking Corp.; and P23.598 million was from Security Bank and Trust Co.
Meanwhile, of the firm’s long term obligations totaling about P770.586 million, P288.226 million came from the Development Bank of the Philippines, the firm’s biggest creditor. RCBC also has a long-term exposure amounting to P56.25 million. Other long-term creditors are Citibank Savings Inc., with an exposure of P96.649 million, the Medical Docotrs Inc. Retirement Fund, which lent P23.5 million; the Social Security System, which lent P21.05 million, and Deutsche Investitions-Und Entwicklungsgesellshaft mbH, which has an exposure of P284.902 million.
The signing of the restructuring agreement came after Medical Doctors posted a 1,360% surge in its net income last year on controlled costs and non-recurring income.
In its financial report, which was audited by Isla Lipana & Co., Medical Doctors said it posted a net income of P223.121 million last year from P15.279 million in 2005. Although net revenues — derived from the operations of the hospital and the school — were just up 6% P2.475 billion from P2.320 billion in 2005, administrative expenses went down 27% to P353.38 million from P488.597 million in 2005, allowing the firm to record a 414.7% growth in operating profits to P438.745 million from P85.244 million.
"We were able to save on operational cost efficiencies," Mr. Soliman said.
He declined to specify particular measures that the company implemented, saying only that the approach was "across the board."
In the notes accompanying the financial statements, Medical Doctors also said it was able to improve on its financials after it made gains of P1.67 million from the disposal of property and equipment.
Also contributory was the reversal of a P20.67 million provision the company made in 2005 for unusued medical equipment, the notes to the financial statements show.
"In 2005, certain medical equipment was determined by the parent company’s management to be for repair and have not been used for operation.... In 2006, the parent company recorded a reversal of impairment charges on certain medical equipment previously identified as impaired. These pieces of equipment underwent significant repairs and were brought back to good working conditions," Medical Doctors said.
The company also posted smaller losses on write-offs for medical equipment, to P3.997 million from P42.275 million the previous year.
The company’s profit before income tax was at P293.65 million, a reversal from a loss of P7.431 million the previous year.
The firm’s assets increased to P4.859 billion in 2006 from about P4.533 billion in 2005, mainly due to an increase in its cash, receivables, and inventories.
With the strong bottom line, Medical Doctors’ deficit — the accumulation of its losses in the past — was reduced to P133.803 million from P360.716 million.
Mr. Soliman said that the company was optimistic that the deficit would be wiped out in no time.
He noted that occupancy of the hospital went up and that for the first quarter of this year, the firm posted an unaudited net income of P65 million after tax expenses.
"We’re looking at gross revenues of P218 million for April. We’re expecting a net income of P80 million for the four months ending April. That’s not too far off [from the 2006 deficit]," he said.
Sought for comment, KMPG chairman Roberto G. Manabat also said that Medical Doctors could wipe out the deficit this year just from its operations.
"It easy to erase a deficit of P133 million, assuming that the level of expenses is maintained and there is a growth in revenues in the company’s forecast," Mr. Manabat, the former General Accountant of the Securities and Exchange Commission, said.
He added that with the entry of the group of Philippine Long Distance Telephone Co. chairman Manuel V. Pangilinan, "the financial institutions would react positively" to the firm.
Medical Doctors is selling P750 million worth of convertible shares with an option to increase this by an additional P150 million. The securities are currently being offered to existing shareholders, but will later be offered to the Pangilinan group.
The group is reportedly interested in getting at least P600 million worth of shares. As of end-2006, Medical Doctors’ biggest shareholders were: Associated Sugar Inc., with a 5.23% stake; San Miguel Corp., with a 4.31% stake; Raul G. Fores, with a 4.21% stake; Julieta Ledesma, with 2.46%; and Remedios Suntay, with 2.42%.
No comments:
Post a Comment