MANILA - Romualdez-led Benguet Corp. reported that it has submitted to its creditors a debt settlement proposal for unpaid debts worth P1.2 billion.

In a disclosure to the stock exchange, the mining firm said it has submitted the proposal through Philippine National Bank, the trustee under the Restructuring Agreement/Mortgage Trust Indenture (RA/MTI).

"Benguet is confident that its submission today to its creditors through PNB will lead to an early resolution of this long outstanding obligation," Benguet said.

However, Benguet did not disclose how it plans to settle its remaining debts. Creditors of Benguet have been demanding that the mining firm finalize a concrete and viable repayment plan to settle its remaining P1.2 billion debts.

Notice of default

Benguet has disputed several notices of default sent by creditors, some of whom have since sold the right and responsibility to collect Benguet's unpaid debt balances to special purpose asset vehicles (SPAVs).

In a letter to the exchange, the mining firm said PNB "still has to issue a Declaration of Default subsequent to the Notices of Default...in accordance to the MTI agreement."

Benguet had contested the default notices sent by the SPAVs since it said it had only been dealing with PNB, which is the trustee of the MTI. The mining firm had asked for more time to validate the claims of the new creditors.

One of the SPAVs, Altus Transactional Services, which is the debt manager of creditors holding on to approximately 49.23% of the total secured loan obligation of Benguet, said in a letter to the mining firm that creditors have already given the company ample time and opportunity to validate the claims of new creditors.

"In view thereof we see no further compelling reason for further delays in the settling the concerns of the validity of the assignment of Benguet Corp. secured loan obligations in favor of the above creditors and on the occurrence of a default by Benguet Corp," Altus said.

Altus is representing Tranche 1 (SPV-AMC) Inc., Marathon Master Fund Ltd., Investment 2234 Philippine Fund Inc (SPV-AMC) Inc., Calyon Manila Offshore Branch and Philippine Distressed Asset Asia Pacific (SPV-AMC) 1 Inc. These creditors collectively hold 49.23 percent of Benguet's total secured loan obligation.

Benguet originally obtained the consolidated loans of P4.2 billion in the late 1980s to finance the development of its Antamok Gold project in Itogon, Benguet Province. Sharp peso devaluation had ballooned the remaining balance to P1.2 billion. The loan balance is secured by a MTI.

Financial advisor

Meanwhile, Benguet also announced that it has appointed investment firm ATR Kim Eng Capital Partner, Inc. as its financial advisor to help the company raise funds for a gold recovery project in Benguet.

"The project involves the reprocessing of mine tailings to recover the remaining gold and also may include other processing activities such as roasting of concentrated pyrite to produce higher gold recovery and that may yield another marketable byproduct of sulfuric acid," Benguet said.

"This move is in line with the previously announced business plan during the annual stockholders meeting in 2008 to create individual project units that can raise the necessary funds to develop the project and create value for BC and its shareholders," Benguet said.

The PSE early this week announced that it will be suspending the trading of Benguet shares for one month starting October 27 because of the company's failure to disclose material information.

Share price of Benguet closed unchanged at P11.50 per share.