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Philippines
Saturday, February 15, 2025
26.8 C
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Saturday, February 15, 2025

Cebu-based shipping company struggling to stay afloat

Estimated reading time: 3 minutes and 47 seconds
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… all is not well in the RORO industry

Roll-on, roll-off (RORO) ships have made their mark on the Philippine economy since former president Gloria Macapagal-Arroyo pushed for their integration into the transportation system.

They have reduced the cost of goods, boosted tourism and eased travel across the archipelago. Hundreds of RORO routes ferry millions of Filipino passengers and offer a cheaper alternative to cargo handlers.

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But all is not well in the RORO industry. A few are fighting for survival, beset by financial difficulties that may sink their fortunes.

Two state-owned banks have found themselves on the receiving end of a sour loan incurred by a Cebu-based RORO company, owned by a businessman running for public office in Mindanao.

Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LBP) are seeking payments of nearly P5 billion from Asian Maritime Transport Corp. (AMTC), whose listed president and chief executive officer is Paul Y. Rodriguez.

AMTC, which borrowed money as early as 2009, provides end-to-end transport and logistics services as well as shipping services for inter-island passengers and cargoes. It prides itself as the largest ship-tonnage owner and operator in the Philippines, serving 32 ports of call.

The weight of the bank loans, however, is too heavy for AMTC to carry. Its four operational routes that ferry passengers and cargo from Camiguin to Cebu and Bohol seem not enough to keep it afloat.

DBP on December 6, 2024 sent AMTC a final demand letter to settle its “past due loan obligation” amounting to P1.479 billion as of October 31, 2024. The bank deemed AMTC’s account as “past due” since January 31, 2019. This means the company failed to make payments as stated in its loan agreement with the DBP one year before the COVID-19 pandemic began.

“Should you fail to make payment or otherwise disregard or ignore this demand, we shall be constrained to initiate, without further notice, the appropriate action in court as may be necessary to enforce and protect the Bank’s interest …,” DBP warned.

The bank added it could foreclose AMTC’s mortgaged properties and file a criminal or civil case for collection.

DBP sent similar demands to Gold Star Properties Corp., which has a suretyship agreement with the bank and AMTC. A suretyship arrangement is a contract in which a third party pledges to pay a debt if the principal debtor fails to settle the obligation.

“The bank had been very considerate to AMTC by giving it more than enough time to settle its obligations by approving the 1st restructuring of its past due obligation in July 2019,” DBP wrote, noting that the proposed restructuring “was not implemented because of AMTC’s continued failure to comply with the terms and conditions of the said restructuring.”

AMTC’s Rodriguez conceded that the company did not have the cash to settle its past due obligations with the bank and reiterated his appeal to “mutually find ways that will allow us to make payments to the extent that we can without crippling or totally stopping the operations of the company.”

“As we have no current means to pay this amount,” Rodriguez wrote in his letter to DBP on September 16, 2024, “we implore you to reconsider your decision and give us the opportunity to sit down with you.”

DBP felt that it had given AMTC enough time to settle its debts.

“The discussions and/or negotiations pertaining to AMTC’s past obligation with the bank cannot go indefinitely. The bank had already afforded AMTC more than enough time to settle its past due obligation with the bank,” DBP said. At least six ships of AMTC were used as collateral to secure the loans, documents showed.

LBP sent a separate demand letter to AMTC on December 13, 2024 to pay its loan obligation to the bank, with the outstanding principal reaching “P3.413 billion exclusive of interests, penalty charges and advances.”

AMTC’s account with LBP includes a short-term loan line and seven term loans, most of which were taken from UCPB that has been folded into the state lender. LBP noted that AMTC loans had been restructured on December 23, 2019 and September 30, 2022.

AMTC attached as collateral 12 ships it uses for its operations, five tractor heads, a fork lift, and two pieces of property in Batangas province to secure the loans.

It would be wise for ATMC’s Rodriguez to remedy his company’s financial debacle first. This should take precedence over his political bid for the lone congressional district of Camiguin province.

E-mail: rayenano@yahoo.com or extrastory2000@gmail.com

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