Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Holding firm APC Group Inc.—long speculated to be the SM group’s future vehicle for
energy assets—has approved a corporate restructuring program designed to wipe out
the company’s P7.73-billion capital deficit.
This is much more aggressive than the reduction in par value contemplated in the past,
which was meant to fast-track the elimination of its capital deficit.
In the disclosure, APC said “the reduction in par value will generate sufficient additional
paid-in capital to wipe out the company’s capital deficit.”
APC is 46.59-percent owned by leisure estate and gaming firm Belle Corp., which is
majority owned by the SM group.
By cleaning up the balance sheet, APC will be ready to accept new businesses. Pundits
have long speculated that APC would be used for the consolidation of the SM group’s
energy assets, particularly its interest in Philippine Geothermal Production Co.
SM first invested in geothermal energy in 2012 with the purchase of a 60-percent stake
in Philippine Geothermal Production Co. In December 2016, Chevron sold its
geothermal assets in the Philippines and Indonesia to a consortium that includes the
Ayala group. Recently, the Ayala group sold its 99-percent interest in ACEHI-STAR
Holdings Inc., the special purchase company that acquired Chevron’s local geothermal
assets last December, to SM group’s AllFirst Equity Holdings Inc.
On its own, APC owns Aragorn Power, which is still in pre-operating stage. In 2008,
Aragorn Power was granted a geothermal service contract (GSC) by the Department of
Energy (DOE) for a site in Kalinga province. The GSC was converted into a geothermal
renewable energy service contract (GRESC) in 2010 so the project could avail itself of
the incentives provided under the Renewable Energy Act of 2008.
As of March 31, 2017, the consent of nine out of 11 ancestral domains has been
secured covering 85 percent of the geothermal service contract area.
In November 2010, Aragorn Power and partner Guidance Management Corp. (GMC)
formed a partnership with Chevron Kalinga Ltd., a wholly-owned subsidiary of Chevron
Geothermal Philippines Holdings Inc., for the development of the geothermal area. The
parties signed a farm-out agreement that gave Aragorn Power and GMC the option to
take an equity position of up to 40 percent in the geothermal project. The parties also
signed a joint operating agreement.
Under the agreement, Chevron will be responsible for the exploration, development and
operation of the steam field and power activities. The effectivity of the two agreements
hinges on the approval by the government of the application for a Financial and
Technical Assistance Agreement (FTAA).
On March 10, 2017, Singapore's Parliament approved the Companies (Amendment) Bill
2017 ("Act") to enhance the country's corporate debt restructuring framework.
The Act was assented to by President Tony Tan Keng Yam on March 29, 2017, and is
expected to become effective later this year.
The Act makes it easier for companies (other than certain excluded entities, such as
banks) or creditors to obtain a judicial management order by lowering the threshold
requirements for court approval. Previously, a company could apply for a judicial
management order if it "is or will be" unable to pay its debts. Under the Act, the
standard is modified to require that the company "is or is likely to become" unable to
pay its debts. In addition, under previous law, a party with the ability to appoint a
receiver for the company had the absolute power to prevent the appointment of a
judicial manager. The Act now obligates any such party to demonstrate that the
appointment of a judicial administrator would cause disproportionately greater prejudice
than the prejudice to unsecured creditors if judicial management were denied.
Schemes of Arrangement. The Act modifies the rules and procedures governing
schemes of arrangement proposed by a judicial manager of a debtor-company pursuant
to section 210 of the Singapore Companies Act ("CA") to incorporate many of the
features of chapter 11, including super-priority debtor-in-possession financing, a "world-
wide" moratorium on debt collection efforts akin to the U.S. Bankruptcy Code's
automatic stay, a mechanism permitting approval of nonconsensual ("cram-down")
schemes of arrangement and procedures for court approval of prepackaged schemes.
The Act includes procedures to govern prepackaged schemes of arrangement, but only
in cases involving consensual, as distinguished from cram-down, schemes. The court
may approve a scheme of arrangement without any meeting of creditors if, among other
things: (i) the debtor-company has provided creditors with a statement, accompanied by
adequate information, explaining the effects of the scheme, the impact of the scheme
on any material interest of the directors or indenture trustees and the effect of the
scheme on such interests; (ii) notice of the application seeking approval of the scheme
is provided to every affected creditor and properly published; and (iii) the court is
satisfied that, had a meeting of creditors been convened, the scheme would have been
approved by the required majorities at the meeting.
A moratorium order may be entered by the court to preclude, among other things: (i)
commencement or continuation of proceedings against the company or its assets; (ii)
appointment of a receiver or manager; (iii) repossession of goods under leases, hire
purchases, or retention of title arrangements; (iv) re-entry or forfeiture under any lease;
or (v) winding up of the company. The moratorium can apply extraterritorially, provided
the court has jurisdiction over affected creditors or their assets. A moratorium order may
be extended to include a debtor-company's domestic and foreign subsidiaries as well as
holding companies if they play a "necessary and integral role" in the debtor's scheme of
arrangement. Certain financial market transactions (e.g., certain set-off and netting
arrangements) are also excluded from the scope of the moratorium.
Upon the filing of an application for a moratorium order, an automatic 30-day interim
moratorium comes into effect with respect to creditor collection actions in Singapore.
The automatic moratorium is available only once in a 12-month period to prevent abuse
through repeated filings.
If the court grants a moratorium order, the Act provides that the debtor-company must
provide certain financial information to creditors to allow them to assess the feasibility of
a proposed scheme. A creditor may seek an order of the court modifying the scope of a
moratorium order. A creditor may also apply to the court during the pendency of the
moratorium for an order preventing the company from: (i) disposing of assets other than
in good faith and inside the ordinary course of business; (ii) engaging in conduct in the
ordinary course of business that materially prejudices creditors or significantly
diminishes the company's assets; or (iii) changing the composition of the debtor-
company's shareholders or members.
The Act formally adopts the UNCITRAL Model Law on Cross-Border Insolvency, a
framework of rules and procedures governing cross-border bankruptcy and insolvency
cases that has now been enacted in 42 countries. Its implementation is expected to
make it significantly easier for foreign companies subject to bankruptcy or insolvency
proceedings in other countries that have assets or operations in Singapore to obtain the
assistance and cooperation of Singapore courts in administering their assets.
The Act abolishes the "ring-fencing rule," whereby the Singapore liquidator of a foreign
company with assets in Singapore was obligated to pay the claims of local creditors
before any of the debtor's assets could be turned over to be administered in the debtor's
foreign bankruptcy or insolvency proceeding.