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Biz Buzz: Inside info?

/ 02:00 AM March 11, 2013

An official of this large publicly listed company sold some shares in his company shortly before a subsidiary reported a major adverse development that resulted in a free fall of the share prices of affiliated companies. As such, regulatory filings suggest that the official was able to lock up gains ahead of the selldown—although it remains to be proven whether he had done so because of some advanced information not available to the investing public.

Under the country’s Securities Regulation Code, it is unlawful for an insider to sell or buy a security of the issuer while in possession of material information with respect to the issuer or the security that is not generally available to the public, unless the insider proves that the information was not gained from such relationship; or if the other party selling to or buying from the insider (or his agent) is identified and the insider proves that he disclosed the information to the other party; or that he had reason to believe that the other party otherwise is also in possession of the information.

Whether coincidental or not, this official may have some explaining to do to capital market regulators.—Doris C. Dumlao


Blind leading the blind

Some officials in charge of the country’s public-private partnership (PPP) program seem to be going about their business blindly by choice, according to some people who have had dealings with them.

And sometimes, they go about their business “blinded” by so-called experts with their own agenda, our source added—which is sad since it ultimately affects the quality of the projects that the government wants rolled out.

One case is the rehabilitation and modernization of the Angat Hydroelectric Power Plant (AHEPP), which had a promising start when 12 potential bidders shelled out P100,000 each to acquire bid documents. Our source said, however, that the majority of would-be bidders passed up the project after their questions and suggestions were ignored by the government agency in charge of pushing the project.

The unresolved issues included the allocation of water rights and management of common facilities with an existing Korean concessionaire, among others. (The general assurance being given by the government agency being “discussions are ongoing about these issues.”) Most bidders were left in the dark until the deadline for the submission of pre-qualification documents, we were told.

As a result, only three groups dared to submit their pre-qualification documents, and only two groups—SN Aboitiz Power and the consortium of Ayala, MPIC and First Gen Energy Philippines—beat the deadline.

One thing certain about this is that competition has been limited to a small group, whose members have tied up, in one way or the other, in chasing after projects being prepared by the same technocrats and “expert” advisers. Will the public get the best deal offer on the AHEPP project from only two bidders? Maybe neither MWSS Administrator Gerry Esquivel nor the PPP Center’s expert advisers know for sure after the door to other potential bidders was shut.

So those wondering about the reason for the slow pace of infrastructure project rollouts should wonder no more.—Daxim L. Lucas



Property mergers

Consolidation seems to be the “in” thing in the property arena these days and, after news that the group of tycoon Henry Sy is considering to take this route for his property units, stock pundits are speculating that another tycoon will follow suit.

Specifically, the market is abuzz with talks that property tycoon Andrew Tan may merge Megaworld Corp. with leisure estate Global Estates Resorts Inc. (Geri), formerly Fil-Estate Land, which is being positioned as a vehicle for tourism-oriented property projects. For some stock experts, such a union makes sense, but others say it will be better for the group to keep these real estate companies distinct from each other—from the point of view of better debt management especially if and when the property cycle turns less favorable.

So we asked Kingson Sian, president of Tan’s holding firm Alliance Global Group Inc., whether there will be wedding bells for Megaworld and Geri. “No truth,” Sian said. Another high-ranking AGI official said, “Not yet.” In all likelihood, even assuming that such a union will someday be inevitable, it’s all a question of timing.

On the other hand, many stock pundits see greater probability of SM Development Corp.-SM Land-SM Prime Holdings consolidation happening, with most bets on SM Prime Holdings becoming the surviving entity. As such, SM Prime president Hans Sy will also become the big boss of the consolidated property vehicle that could emerge as the biggest property company in the country (and one of the largest in the region). Two foreign investment banks are working on this game-changing proposition, which is, however, a litmus test to second-generation Sy family dynamics, to say the least.—Doris C. Dumlao

Rockwell in Greenhills

After Rockwell Land’s first townhomes project in Quezon City, 205 Santolan by Rockwell, this premier property developer is reportedly launching a second residential, low-rise development this first quarter of 2013. With the company’s continuously growing clientele, Rockwell’s second townhomes project is set to be in Greenhills. The development will be a very exclusive property and will be a gated community.

Like most Rockwell projects, sales are expected to be brisk—but especially so for this one, given its location, and the fact that these low-rise developments mark a subtle market diversification for the company known for its ultra-expensive condos.—Daxim L. Lucas

More investment scams

The Securities and Exchange Commission uncovered two more investment scams victimizing people in Davao City and Tandag City, Surigao del Sur, early this month.

Based on an advisory issued last Friday, the SEC has received reports that a certain company in Davao City was illegally selling life insurance and pre-need memorial plans using the pyramiding scheme. The SEC has urged the public to make sure that the company offering the products are properly registered with the SEC and licensed to offer these products.

The illegal scheme in Davao offers members life insurance, memorial service and a big income potential. The availment of benefits is subject to two conditions: 1) membership by paying a specific amount over five years in monthly, quarterly or semi-annual installments and 2) inviting and adopting three persons to join and do the same.

In another advisory dated March 4, the SEC said many teachers from various schools in Tandag City have invested in a suspected pyramiding scam. The teachers were encouraged to invest P16,800 with a promise to “double the money” in six months and to receive $10,000 for another six months. The SEC urged the public not to invest in high-yield risk investment or believe in promises that are too good to be true.

Suspected investment scams can be reported to the Corporation Finance Department of the SEC at telephone numbers 584-61-03 or 584-59-50 or the Enforcement and Prosecution Department at 584-71-87.—Doris C. Dumlao

Not cost-cutting

Central bank officials are put on the defensive mode given insinuations that the Bangko Sentral ng Pilipinas was forced to cut interest rates on special deposit accounts (SDAs) as a way to reduce mounting expenses and losses.

The BSP has never executed monetary policy merely in consideration of its bottom line, officials say. “Policymaking will never be influenced by considerations of the BSP’s financial standing because we (BSP) can always work it (financial problem) out with the national government. Whenever the BSP implements a policy, it does so not for its bottom line,” says BSP Assistant Governor Ma. Cyd Tuaño-Amador.

At the same line, BSP Deputy Governor Diwa Guinigundo says cutting the SDA rate is a move meant to align monetary policy in the Philippines with international standards. He says that while the rate cut will help reduce expenditures of the BSP, that is not the direct objective of the move.

“We did what we did on SDAs so that we can push out funds from the BSP to the various financial markets and business activities. We did what we did to help further develop the capital markets and enable better fund matching,” Guinigundo says. “If funds remain with the BSP, we are effectively stifling the development and deepening of our capital markets.”

The BSP last month slashed the SDA rates to a uniform rate of 3 percent at a time when deposits at the central bank’s SDA facility were at about P1.7 trillion. Previously, the rates were set at varying margins above the 3.5-percent overnight borrowing rate of the BSP depending on maturity.

Rising expenses of the BSP, led by payments for interest on deposits, have dragged its financial standing. The central bank incurred a net loss of about P86 billion in the first 11 months of 2012.—Michelle Remo

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TAGS: Bangko Sentral ng Pilipinas, bidding, consolidation, Infrastructure, Interest Rates, investment scams, Markets and Exchanges, mergers, Philippines, property, public-private partnership, Real Estate, Rockwell Land, Securities, special deposit accounts
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