BDO Unibank Inc. is relinquishing majority control of unit BDO Leasing and Finance as part of the restructuring of its leasing business.
The restructuring is aimed at optimizing the financial needs of clients in light of new accounting regulations covering lease transactions.
IFRS 16, which took effect in January 2019, requires leases to be recognized on-balance sheet, similar to a loan facility. This makes lease transactions a less attractive option to corporate borrowers compared to the previous arrangement.
Under the restructuring plan, BDO has incorporated a new, privately-held company BDO Finance Corp. to provide customers continuing access to lease products and services.
Additionally, BDO Finance will assume current lease transactions booked in BDOLF to provide continuity to existing clients.
Meanwhile, clients who now find regular bank loans more attractive vis-à-vis leases can access BDO’s wide range of products and services.
“We wish to reassure BDOLF clients that their financing requirements will continue to be serviced, and there will be no effective change in their existing lease arrangements that will be assumed by BDO Finance,” BDOLF president Roberto E. Lapid said.
Meanwhile, BDOLF will be re-named and its Articles of Incorporation and By-laws will be amended to reflect the new business direction.
As required under the law, the buyer shall make a tender offer for the remaining BDOLF shares held by minority investors.