PNB Confident on PAL Rehabilitation Program

June 23, 1998 PSE CIRCULAR FOR BROKERS NO. 1398-98 PNB Confident on PAL Rehabilitation Program The Philippine National Bank (PNB) said it is confident that a rehabilitation program for Philippine Airlines (PAL) will be finalized by the Securities and Exchange Commission (SEC) and will be put in place by August. PNB President Peter B. Favila said the creditor banks have all agreed to fully cooperate with the Securities and Exchange Commission (SEC) in developing PAL's rehabilitation program, saying "the banks are optimistic that the SEC will be able to finalize and put a rehabilitation plan in place in the next two months." He said the creditor banks are confident that despite PAL's current financial difficulties all of their exposures to the country's flag carrier will be fully satisfied over time. PNB has an exposure to PAL of $80.2 million (P3.3 billion) in short and long term loans. These loans, however, are secured by choice collaterals which include a mortgage on real estate assets conservatively valued at P6 billion, plus the PAL building in Makati worth P600 million and a number of aircraft and purchase rights for new planes. When PAL filed for a rehabilitation plan last week, the total loan exposure to the national flag carrier were all current and fully secured. "We never had any problems with PAL when it come to servicing their account. The airline has no history of default. Their payments are always up-to-date," Favila said. "To our mind, the rehabilitation plan has even improved PAL's ability to settle over the long run its obligations with its creditors," he said.