Bankard capital rehab to wipe out P1-B deficit

By Emeterio SD Perez / Section Editor

BANKARD is finally on its way to recovery. Not only has it been profitable at least in the last three years, but it is also speeding the process of financial rehabilitation by wiping out its accumulated deficits which has already topped P1 billion as of December 31, 2011.

The credit-card company is formerly a unit of Philippine Commercial and International Bank and of Equitable PCI Bank. Then RCBC Capital Corp., a unit of Rizal Commercial Banking Corp., bought it from Equitable PCI in 2003.

As reported in the RCBC filing, RCBC Capital bought Bankard from Equitable PCI for P1.80 billion. Later on it claimed it had been misled into buying Bankard and sought an arbitration claim with the International Chamber of Commerce. In its complaint, RCBC Capital sought rescission of the sale for “alleged deficiencies in Bankard’s accounting practices and non-disclosure of material facts in relation to the acquisition.” It also sued SGV & Co. as Bankard’s external auditor.

In a filing posted on Thursday on the website of the Philippine Stock Exchange, Bankard said its board approved the financial cleansing, or quasi-reorganization, in a meeting it held on Tuesday.

In its present ownership profile, Bankard listed RCBC as owner of more than 1.375 billion shares, or 89.98 percent of outstanding shares. Of the RCBC-owned Bankard shares, RCBC Capital holds 375.460 million, or 24.56 percent of outstanding shares.

Outstanding shares are shares issued and still held by stockholders including the public investors. In the case of listed companies, some shares owned by the controlling stockholders and some of those held by the public are lodged with PCD Nominee Corp., which acts as record stockholder.

In a letter to the PSE, Bankard said the capital restructuring involves the application of its additional paid-in capital (Apic) and reduction in the par value of its shares to P0.55 from P1 per share. With the proposed lower par value, Bankard will have a reduction surplus of P687,813,300, which is the product in multiplying 1,528,474,000, Bankard’s outstanding shares, by P0.45.

The reduction surplus plus the Apic of P375,285,179 totals P1,063,098,479. Applied against Bankard’s deficit of P1,001,459,054, leaves the company with a surplus of P61,639,425.

Bankard’s financials as of December 31, 2011, are contained in an independent audit report prepared by Punongbayan and Araullo which states that Bankard’s Apic dropped to P375,285,179 from P390,301,874 in 2010 because it lost from the re-issuance or resale of 26,580,100 treasury shares.

In 2010 Bankard paid P37,875,581 in buying back 26,580,100 shares. The acquisition cost translates to P1.425 per share. In 2011 it lost P15,016,695, or 39.649 percent, in re-issuing or reselling these shares for P22,858,886, or P0.86 each

Bankard has been operating profitably in the last three years, registering a net profit of P103.256 million in 2009, which went up 23.823 percent to P127.855 million in 2010. In 2011 net income fell 7.368 percent to P118.435 million.

As of December 31, 2011, an audit report showed Bankard had current assets of P775.048 million against current liabilities of P78.775 million.

(As published in BusinessMirror, 20 April 2012.)