First Pacific, despite rumours of the company's gloomy financial prospects, says it is moving closer towards refinancing all outstanding debt. Its Manila-based executive chairman Manuel Pangilinan acknowledged rumours circulating about the company's alleged financial difficulties. He said the recent negative talk was based mostly on investor worry the company would have difficulty refinancing US$360 million in convertible notes due next March. 'We are actively talking with our banks for a medium-term facility to refinance those bonds,' he said. He said defaulting on the bonds was not an option. 'We would absolutely not - and have never - default on our loans,' Mr Pangilinan said. Yesterday, the investment-holding company blamed weak regional currencies and the disposal of profitable subsidiaries for its net loss of US$12 million in the six months to June 30. A year earlier, it had a US$50.4 million interim profit. During the half, First Pacific suffered US$32.5 million in foreign-exchange losses. 'The effect of translating results into US dollar terms was the major cause of the loss,' Mr Pangilinan said. He said the peso had fallen about 70 per cent in value compared to last year, while the rupiah and baht registered falls of 25 per cent and 14 per cent respectively. He said the foreign-exchange losses were largely unrealised and if the accounts were to be restated now, the company would record a US$5-million profit. The company also missed contributions from FPD SPORTathlon, First Pacific Bank and Savills, which were part of assets it disposed of last year. The three combined to contribute US$6.4 million in recurring profit for the first six months last year. Still, First Pacific's consolidated gearing - total debt against equity - has risen to 85 per cent from 78 per cent as at June last year. Metro Pacific - its Philippines property development arm - has about US$210 million in loans which the company needs to refinance over a longer period given the slowing Manila property market. Mr Pangilinan said land and asset disposals would form part of its strategy to lower the company's debt profile. However, First Pacific's other operational arms have had some success in managing their debts during the interim period. Mr Pangilinan said debts at Berli Jucker - its conglomerate arm in Thailand - were now principally denominated in baht or yen, rather than US dollars, lowering the exchange-rate risk. Indofood - its 48 per cent Indonesian foodstuffs company - repaid US$60 million in debt in the first half and an additional US$120 million, subsequent to June. Its total debt now stood at US$426.8 million. Bonifacio Land - Metro Pacific's downtown Manila redevelopment project - also refinanced 3.1 billion pesos (about HK$465 million) worth of debt into a seven-year term loan amounting to 2.1 billion pesos. The remainder of the original debt was paid down in cash. One investment analyst covering First Pacific said the company may sell further assets to try to pay down the convertible notes to a level more palatable to its banks. Mr Pangilinan would not be drawn into speculating whether the company would divest assets. However, he did say that Philippine Long Distance Telephone, Indofood and Berli Jucker form the cornerstones of the company's Asian strategy and they would not be sold. Still, the company was reviewing options for its Indian cellular arm, Escotel, which was in need of further financing to take part in four new cellular licences in northern India won by its partner Escorts Group.