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.