First Pacific to buy convertibles in open market, purchases $9.5 million

New York, Jan. 16 - First Pacific Co. Ltd. said it has decided not to go ahead with plans for a formal tender offer for its outstanding convertible bonds and will instead repurchase the securities in the market. The Hong Kong company started the buybacks with purchases of $9.5 million of the convertibles.

First Pacific said that a tender offer would likely take too long to carry out.

Instead, the company has appointed ING Barings as its agent to purchase the convertibles.

The repurchases will run though Jan. 23.

After that date, First Pacific will deposit enough funds with the trustee to redeem the remaining convertibles at maturity on March 27, 2002.

In the first repurchases, First Pacific bought $9.52 million of the convertibles at a cost of $12.8 million. The transaction reduces the face outstanding to $198.444 million which will cost $266 million to redeem.

First Pacific announced its plans for a tender after a property company told its Larouge unit it will be unable to repay a $90 million loan.

First Pacific said it planned to launch the tender "in order to allay any convertible bond repayment concerns that might exist as a result of this development."

The Hong Kong-based company said it will repay the $208 million principal of convertibles then outstanding at a cost of $281 million, including interest and the redemption premium. It will fund the payment through $90 million of cash on hand and by drawing down from a previously announced HK$1.56 billion ($200 million) facility.

First Pacific issued $350 million of the five-year convertibles in March 1997 through its First Pacific Capital (1997) Ltd. unit. The securities pay a coupon of 2% and can be converted until March 2002 at a price of HK$12.25 per share. They are redeemable at 134% of face value. So far the company has repurchased approximately 43% of the issue.

The loan problem concerns Philippine property company Metro Pacific Corp., which borrowed $90 million from First Pacific's Larouge unit in April 2001. The loan was due Dec. 31, 2001 and was secured by a pledge of Bonifacio Land Corp. shares owned by Metro Pacific.

First Pacific said Larouge will now co-manage with Metro Pacific the sale of Metro Pacific's 69.6% controlling stake in Bonifacio Land Corp., a joint venture with the Philippine Government to redevelop part of Manila's business district. MPC is also working on a plan to reduce its debt, to be announced no later than the end of February.

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