By JOSEPH G. LARIOSA

(Journal Group Link International)

C HICAGO, Illinois (JGLi) – A Philippine-based courier service dubbed as "Hari ng Padala"  (courier king) that operates in 11 countries was ordered to shell out US$12.8-M in a court settlement after a long drawn-out court litigation that started from a “betrayed” business sense that hinged on a childhood and classmate trust.

A spokesman of Judge Harold E. Kahn of the Superior Court of California in San Fancisco told this reporter that the civil case between ATR-Kim Eng Financial Corp., et al, v. Carlos Araneta, et al, Defendants, “has been settled” but refused to give out details.

A court trial scheduled last July 20 was discontinued after ATR-Kim Eng Financial Corp. based in Makati City in the Philippines hammered out an agreement with “Mr. Carlos R. Araneta, his family, and the LBC Group (collectively called LBC Parties)” to pay it “a package consisting of cash in the amount of US$2.5-million, interest bearing promissory notes fully secured by irrevocable and unconditional stand-by Letters of Credit in the amount of US$5.0-million, and 226,072 common stock shares of stock representing a 49.38% ownership in MNB Holdings Corporation (“MNB Holdings”), the bank holding company for Mission National Bank (“Mission Bank”) in San Francisco, California U.S.A.

“In exchange, all the cases that the two groups have filed against each other in the US and in the Philippines will be dropped and mutual releases will be issued.”

A phone call for Araneta’s lawyer, Michael Baker, in San Francisco for comment was not returned. However, an email message from Araneta’s flagship’s South San Francisco-based LBC Mundial USA’s Patricia G. Garcia, marketing director, said “this was a case between Mr. Araneta and ATR-Kim Eng. Secondly, Mr. Araneta has been retired for years. So it would be best to go through his lawyers.  We will not be giving him justice as we are not even privy to any information.”

A “Global Settlement Agreement”

In a letter to the Securities and Exchange Commission and Philippine Stock Exchange on May 7, 2009, Renato L. Leveriza, Jr., director and executive vice president of ATR Kimeng Financial Corp., based in Makati City, said, “The management of ATRKE Financial considers the terms of the global settlement agreement to be satisfactory. The Company estimates the total value of the settlement package to be worth approximately US$12.8 million, because the package includes the shares in MNB Holdings, which had a proportionate book value of US$ 5.5-million, based on the audited financial statements of MNB Holdings as of 31 December 2008.”

The US$12.8-million is equal to the 617.4 million pesos as the “value of Claims from Court Judgment Award” to “ATR KE in 2006 by the Court of Chancery of the State of Delaware, which was affirmed in 2007 by its Supreme Court, which ordered Araneta and two other individuals to pay ATRKE Financial US$24.49 million, plus expenses and interest, in an action against them for waste and breach of fiduciary duty as former directors of the LBC Group’s Delaware holding company in which ATRKE Financial had previously invested in.”

The ATRKE Financial sought to enforce the Delaware judgment award against certain assets of the LBC Parties in the US and in the Philippines by filing cases before the Superior Court of California.

But both parties came into “global settlement agreement” during mediation over the summer before the cases went into trial.

The cases arose in 1999 when ATRKE signed agreements with Carlos Araneta, a major stockholder of LBC Group, which paved the way for Araneta’s investment into the ATRKE, a pre-need business enterprise.

ATRKE’s chairman, Ramon Arnaiz, was Araneta’s friend and financial adviser. They were childhood friends and classmates at La Salle.

Included among the deals is a Shareholders Agreement where Araneta and ATRKE would equally own Professional Holdings, a company that would own 80% of ATRKE.

Part of the deal was for the Delaware-based holding company, LBC Global Corporation, to let ATRKE own 10% of the LBC Global Corp.

The LBC Global Corp. would own LBC operating companies, including equity in the pre-need business. But ATRKE had option to sell back the shares (a put option) by Aug. 13, 2004.

In Nov. 2002, ATRKE exercised its option to sell its 50% share in Professional Holdings. Armed with the right-of-first refusal, Araneta refused to acquire ATRKE’s share. This prompted ATRKE to sell its share to a third party, who already owns 20% of the pre-need enterprise.

A raneta felt betrayed by this act of ATRKE chaired by his friend, Arnaiz, because he no longer has controlling interest in the pre-need business enterprise they had entered together. Araneta, then, started his revenge.

In the months that followed, ATRKE repeatedly requested information on LBC Global. These requests fell on deaf ears, prompting ATRKE to resort to legal remedies and the courts.

In December 2003, a Delaware court ordered Araneta to provide financial information.  It was then that the ATRKE found out that Araneta, during the last nine months of 2003, had stripped LBC Global of all the LBC operating companies, leaving only an ownership of minority position in the pre-need company.

LBC Global was originally said to be founded in 1950’s as LBC (Luzon Brokerage Corporation) Express, one of the oldest courier companies in the Philippines. It now delivers money remittance, courier, cargo and balikbayan-box delivery services in the Philippines, Brunei, Hongkong, Italy, Malaysia, Singapore, Spain, Taiwan, UAE, USA and Canada. It has also diversified into other service businesses. (lariosa_jos@sbcglobal.net) # # #