The Philippine Stock Exchange (PSE) board of directors will decide on Wednesday whether to reconsider its decision to slap Benguet Corporation with a 30-day trading suspension for failure to disclose notices of default for debts amounting to P1.2 billion.

PSE president Francis Lim noted though that the monetary fines will likely stay although the board will still consider whether there is merit reducing or lifting the 30-day suspension.

He said the firm is arguing that it was not yet declared in default and should not be penalized as if it had failed to disclose a default in payment of loans. Lim said the PSE board is meeting on Wednesday and Benguet’s plea will be taken up.

However, Eagle Securities president Joseph Roxas noted that it will be difficult for the board to have announced a suspension and then backtrack because it will be unfair to shareholders who have already sold shares prior to the suspension.

In a disclosure filed by Benguet, the firm pointed out that Philippine National Bank has clarified that it has yet to issue a declaration of default after sending Benguet several notices of default.

Benguet said it holds the “position that the issue of materiality and the applications of the (PSE) disclosure rules will only come into play when there is the existence of actual default status versus mere individual notice which may or may not produce the effects of default.”

However, Lim noted that even the notices of default are already material information that should have been timely disclosed to the PSE considering that it will have an impact on the company’s share price.

Meanwhile, Benguet said it has submitted a debt settlement proposal to its creditors through PNB as trustee under the restructuring agreement/mortgage trust indenture.

Benguet had originally obtained loans amounting to P4.2 billion in the late 1980s to finance mining operations in Antamok Gold project in Itogon, Benguet Province. The project turned out not to be profitable because of falling gold prices.

The firm managed to pay creditors P3.3 billion in principal plus interest of P1 billion to reduce its debt to P877 million. But due to the peso devaluation, it owes an equivalent of P1.2 billion today.

Benguet received a notice of default last February 23 from the PNB Trust Banking Group after the company failed to settle its obligations with the Tranche 1 (SPV-AMC) Inc.

“Based on the records, the corporation [also] received the notice on March 4, 2009 from PNB in the latter’s capacity as trustee under the Mortgage Trust Indenture,” the PSE said.

Benguet then received on July 1 a notice of default from PNB regarding its loan obligation with Investment 2234 Philippines Fund 1 (SPV-AMC) Inc., which the mining firm did not disclose, the PSE said.

The mining firm received other notices of default from creditors Calyon Credit Agricole CIB, Philippine Distressed Asset Asia Pacific (SPV-AMC) 1 Inc., Bank of America, Marathon Master Fund Ltd., and Asset Pool A (SPV-AMC) 1 Inc.