Business case no 1

In January 2016, ABC Medical Center was granted by DEF Bank with a P500M Term Loan to finance the

construction of 10-Storey, 100 bed capacity Hospital Building. The loan will be paid within 10 yrs. with 3

years grace period on principal repayment. As post release requirement, the borrower was required to

increase its authorized capital from P50M to P250 M with a minimum paid up capital of P150M within
two years from date of loan approval. Cost overrun shall be shouldered by the Company.

* DEF Bank is the sole creditor bank of ABC Medical Center. The project is expected to be completed by
December 2018. However, due to various revisions made on the design of the proposed hospital, the
project was considerably delayed for two years. The target completion date was moved to Dec. 2020.
The stockholders of ABC Medical Center infused P100M additional funds as advances from stockholders
to fund the additional project cost due to revisions of the project design. The revisions, however, had
greatly affected the liquidity position of the Company as well as the stockholders.

During the last quarter of 2018, ABC Medical Center received a SOA from DEF Bank reminding the
Company on the upcoming first Principal amortization for the term loans which will be due in March
2019. DEF Bank also called the attention of ABC Medical Center on the delayed completion of the
project which have still an unavailed amount of P100M.

The Board of ABC Medical Center immediately convene to discuss the strategic solutions to address the
Company’s upcoming loan amortization. As the CF O of the Company, what solution/s would you
recommend to the Board to maintain the good credit record of the Company and to enable the
Company to still draw the remaining amount of the loan?