U.S. bank has to play nice with PAL: Regulator

U.S. bank has to play nice with PAL: Regulator

MANILA (AFP): Philippine laws bar the U.S. Export-Import Bank
from seizing planes of ailing Philippine Airlines (PAL), the
chief corporate regulator said Thursday, vowing to block any
confiscation.

Perfecto Yasay, chair of the Securities and Exchange
Commission (SEC), warned the US Ex-im Bank his office "will not
hesitate in taking such appropriate measures" to enforce its
authority as the overseer of PAL's rehabilitation plan.

Yasay was reacting to moves by the bank, a major secured
creditor of PAL, seeking approval from U.S. bankruptcy courts to
confiscate four Boeing 747s whose purchase it had financed.

The bank withdrew its conditional support for a rehabilitation
plan to steer the national-flag carrier from a permanent
crashlanding. It slammed the management under ethnic Chinese
tycoon Lucio Tan for not being transparent.

"My I remind you that Ex-im Bank has already submitted itself
to the jurisdiction of the Philppine SEC with regards to the
suspension of debt payment and rehabilitation petition of PAL,"
Yasay said in a letter to bank officials.

"You are therefore bound by the lawful orders of this
commission," he said.

He also told them that "under our laws, all creditors of PAL,
including Ex-Im Bank, are prohibited at this time from proceeding
in any other court or tribunal against any asset envisioned in
the rehabilitation... unless otherwise ordered by the Philippine
SEC."

In a radio interview earlier Thursday, Yasay chided the US
bank for acting like a "bully."

The SEC must rule by June 5 whether to accept a rehabilitation
plan for debt-ridden PAL or order the liquidation of Asia's
oldest airline.

U.S. Ex-im Bank accounts for 16 percent of PAL's debt of $2.24
billion.

Presidential spokesman Fernando Barican said any seizure of
the four planes would impact more on the airline's international
services.

The U.S. bank had actually seized two PAL Boeing jets outside
the Philippines earlier this year, but returned them after PAL
agreed to resume partial interest payments.

The airline has said the rehabilitation plan had the
conditional support of European creditors which account for about
40 percent of PAL debt.

PAL stopped paying its debts in June and closed for 13 days in
September due to cash flow problems and a crippling pilots's
strike.

It reopened in early October with just 21 planes, less than
half of its original fleet.

U.S. Ex-im Bank objected to the return to the top PAL
management of majority shareholder Lucio Tan.

The billionaire businessman had stepped aside in January after
creditors in December rejected a rehabilitation plan to keep PAL
afloat.

He returned to the cockpit last month when the management who
took over from him failed to find new investors.

He pledged to shoulder the $200 million spelled out in a new
PAL rehabilitation plan in the absence of a new investor.

"No one in his right mind would put $200 million into a
company and forfeit his right to manage it," Yasay said in the
interview.

President Joseph Estrada on Thursday vowed to "to do
everything within my power" to steer PAL from a permanent
crashlanding.