Victorias Milling Co. Inc. (VMC) has paid its debts to EastWest Banking Corp. and may not be legally compelled to issue shares in lieu of paying its monetary obligation to the bank, the Court of Appeals ruled.
In a disclosure to the Philippine Stock Exchange (PSE) Wednesday, VMC said that the CA has affirmed the August 15, 2015 en banc ruling of the Securities and Exchange Commission (SEC), that the Gotianun-led bank cannot swap the convertible notes amounting to more than P300 million issued by the sugar miller into equity.
In a decision on January 19, 2016, the Special 8th Division of the appellate court denied the “Motion to compel Victorias Milling Corp. to allow East West Banking Corp. (EWBC) to exercise its option for the conversion of the unconverted convertible note (CN).” The motion was previously filed by EWBC with the Special Hearing Panel 1 of the SEC.
The CA noted it denied the petition of EWBC and affirmed the SEC decision on August 11, 2015.
In the decision, the court held that VMC paid and redeemed the convertible note, issued by the sugar miller in favor of EWBC, in line with the terms and conditions of the Alternative Rehabilitation Plan and the Debt Restructuring Agreement entered into between VMC and its creditors on April 29, 2002.
Previously, the debt-saddled miller was able to convert some P1.1 billion of its debt from its unsecured creditors at a ratio of P1 of debt to P1 of common stock.
The conversion resulted in a change in management control of the company on October 9, 2002, in which the creditors controlled 69 percent of the sugar firm, while the interest of stockholders prior to the conversion was reduced to 31 percent.
Tycoon Lucio Tan owns about a fifth of VMC, while the First Pacific group intend to increase its respective holdings in firm.