MANILA, Philippines - Publicly listed Benguet Corp. has received a notice of default from Philippine National Bank (PNB) covering its remaining debt worth P1.2 billion.

In a disclosure to the Philippine Stock Exchange, Benguet said it received on January 11 a notice from the trustee bank stating that its secured obligation covered by the Mortgage Trust Indenture (MTI) was already due and payable.

The Romualdez-owned miner questioned the issuance of the notice, saying its settlement offer to creditors was still pending, and the validation of the list of creditors of record has not yet been completed.

"Benguet has written the PNB that the notice is premature and unnecessary," the company said.

Benguet said it found deficiencies in the assignment of some of its debts to special purpose vehicles after reviewing transfer documents.

"The validation process has not been completed pending compliance/curing of the deficiencies of the notice requirements on the part of the substituted creditors," the company noted.

The company also said some of its creditors have not yet given their positions on its settlement offer. The offer, which was amended last December 17, contained specific timeframe for the settlement of Benguet's remaining debt.

Benguet offered to settle its debt either by purchasing 20% of the outstanding principal amount in cash or by purchasing it for $2 million and dacion of Antamok Mill.

The Antamok Mill was constructed in 1991 at $45.3 million and $8 million financing cost. However, the mill today has an economic value of only $9.4 million.

Aside from PNB, other creditors of Benguet include Investment 2234 Philippines Fund 1 (SPV-AMC) Inc., Calyon Credit Agricole CIB, Philippine Distressed Asset Asia Pacific (SPV-AMC) 1 Inc.., Bank of America, Marathon Master Fund Ltd., and Asset Pool A (SPV-AMC) 1 Inc.

Benguet obtained P4.2 billion in dollar- and peso-denominated loans in the 80's to finance the development of its Antamok Gold project in Itogon, Benguet province.

But the project was discontinued after the price of gold plummeted.

Despite the financial difficulty, Benguet said it was able to pay P4.4 billion, consisting of P3.3 billion in principal plus interest of about P1.2 billion, from 1993 to 2000.

Due to the sharp peso devaluation, its remaining debt ballooned to P1.2 billion.