Banco de Oro Universal Bank provides a - Asianbanks.net

64 BANCO DE OROBills payable bears interest rates of 3.9% to 13.70% per annum in 2005 and 1.89% to 13.70% per annum in 2004.On October 16, 2003, the Bank listed 6.5% US$150,000 senior notes in the Singapore Stock Exchange which will mature on October 16,2008. The net proceeds from the issuance of the senior notes amounted to US$146,621 or about P8,890,000. Interest expense incurredby the Bank on these senior notes amounted to P538,975 in 2005 and P546,841 in 2004 (shown under Interest Expense on Bills Payableand Other Borrowings in the statements of income).As required under PAS 32, Financial Instruments: Disclosures and Presentation, the Bank recognized as financial liability 25,000,000 sharesof redeemable, cumulative and non-participating preferred shares with a par value of P10 per share issued to SMPHI on October 18,2004. The preferred shares were issued at US$2 per share or an aggregate subscription price of US$50,000. The preferred shares entitleSMPHI to cumulative dividends, payable in US dollars semi-annually in arrears, equal to 6.5% of the issue price per annum. The Bank isalso required to redeem the preferred shares from SMPHI at the original issue price five years from the date of issue. As required by BSP,the Bank setup a sinking fund on October 17, 2005 for the redemption of the preferred shares. The balance of the sinking fund as ofDecember 31, 2005 amounts to P570,008 and is invested in debt securities, shown as part of Held-to-Maturity Investments in thestatements of condition (see Note 9). Dividends in arrears (recognized as interest expense) as of December 31, 2005 and 2004 amountedto P122,218 and P37,589 computed using the exchange rate at year end and are presented as part of Bills Payable account in thestatements of condition.On June 27, 2002, the Bank entered into a US$20,000 convertible loan agreement with IFC. IFC has the option to convert a portion ofthe loan into common shares of the Bank commencing two years after the date of the agreement for P16.70 per share. Total proceedsof the loan amounted to P1,111,720. In compliance with PAS 32, Financial Instruments: Disclosure and Presentation and PAS 39, FinancialInstruments: Recognition and Measurement, the Bank separated the equity component of the conversion option and unsecured loanwith IFC. The balance of common stock option outstanding as of December 31, 2005 and 2004 amounted to P13,634 and P27,268,respectively. The loan bears interest at a rate of 4.03% per annum and will mature in 2008. Total interest paid by the Bank amountedto P31,710 in 2005 and P20,490 in 2004, of which P30,896 and P19,964, respectively, are charged to income and shown under InterestExpense on Bills Payable and Other Borrowings in the statements of income while P814 and P526, respectively, are recognized asdividends which were directly charged to capital funds.Upon approval by the Bank’s Board of Directors on February 11, 2005, the Bank converted US$10,000 convertible loan from IFC, qualifiedas Tier 2 capital, and issued 31,403,592 common shares of the Bank based on the conversion price of P16.70 per share and exchange rateof P52.44 to a dollar. The BSP subsequently approved the conversion on May 3, 2005.17. OTHER LIABILITIESOther liabilities consist of the following:ConsolidatedParent2005 2004 2005 2004Accounts payable P 1,857,805 P 808,144 P 1,673,718 P 744,590Sundry credits 1,756,415 1,846,057 1,756,415 1,846,057Due to UOBP (see Note 23) 600,000 - 600,000 -Outstanding acceptances payable 525,093 557,961 525,093 557,961Manager’s checks 469,268 365,437 469,269 365,438Accrued other taxes and licenses 254,488 244,159 250,639 241,950Capitalized interest and other charges 179,022 126,817 119,012 126,817Due to BSP 110,553 87,984 110,553 87,984Due to insurance companies/Treasurer of the Philippines 38,747 45,993 68,115 17,697Others 1,069,299 1,012,369 749,559 902,314P 6,860,690 P 5,094,921 P 6,322,373 P 4,890,808Sundry credits pertain to bills purchase line availments which are settled on the third day from the transaction date.Capitalized interests and other charges represent interest on restructured receivables from customers. These are recognized as incomeonly upon collection.18. CAPITAL FUNDS18.1 Issuance of Global Depositary Receipts by PrimebridgeOn January 25, 2006 and February 14, 2006, Primebridge Holdings, Inc. (Primebridge), a stockholder owning 22.08% of the Bank’s totaloutstanding shares as of December 31, 2005, offered and sold 9,056,000 global depositary receipts (GDRs) each representing 20 shares ofthe Bank’s common stock with a par value of P10 per share. The GDRs constitute an offering in the United States only to qualifiedinstitutional buyers in reliance on Rule 144A under the U.S. Securities Act of 1993 (the “Securities Act”) and an offering outside theUnited States in reliance on Regulation S under the Securities Act. The offered price for each GDR is US$12.70.