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$38-m loan in Medical City questioned

The former president and chief executive officer of The Medical City has asked the hospital’s treasurer to disclose the terms and conditions of a $38-million loan extended by a Singapore-based investor and which was used to fund the acquisition of Professional Services Inc. shares.

Dr. Alfredo Bengzon in a statement called on Jose Xavier Gonzales “to bare the truth” regarding the “real intention” of the loan from Viva Holdings, saying the transaction might have “failed to protect the interest of the company and other stockholders.” Viva Holdings is identified with the Clermont Group, an international finance services and retail conglomerate.

Bengzon earlier filed a complaint before the Securities and Exchange Commission questioning the validity of the acquisition of a 54-percent stake in PSI by Gonzales’ companies and Viva Holdings. PSI owns and operates The Medical City.

Bengzon claimed the group, through allegedly “fraudulent” actions, acquired and increased its shareholding from at least 35 percent to over 50 percent.

Bengzon said Gonzales had admitted that the $38-million loan extended by Viva funded the acquisition of PSI shares by Gonzales’ holding company in 2013. Gonzales  said loan had since been “satisfied.”

Bengzon alleged that under the agreement, the loan and all accrued interest could be converted to one share of Gonzales’ HK company. Gonzales could then buy back that share from Viva for only HK$101, if he was able to deliver to Viva an amended articles of incorporation of PSI, where the corporation’s right of first refusal was removed.

“Gonzales should explain to PSI shareholders if this is what he means with his repeated public statements that the loan has been ‘satisfied.’ If so, Gonzales seems to have gotten the deal of the century—HK$101 for US$38 million,” Bengzon said.

He also dared Gonzales to explain why the removal of the corporation’s right of first refusal “is so important to Viva Holdings that it would be willing to risk US$38 million to get this done?”

Topics: The Medical City , Professional Services Inc. , loan
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