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The group of PLDT chair Manuel V. Pangilinan continues to be unsuccessful in expanding its growing media empire abroad, but given recent developments, MVP’s camp may soon have its very own “Financial Times.”
No, this isn’t about a blockbuster merger deal with the FT Group, the globally respected print and online business publishing firm, but rather a mold to draw inspiration from should PLDT finally take control of Business World.
A final deal has yet to be signed but Pangilinan already has big plans for the Philippines’s oldest business daily—at least in terms of content.
“My model is the Financial Times, where [articles] are written very well and the analysis is very good,” Pangilinan said.
New plans could also include an analysis-focused weekend edition (Business World runs five days a week plus a Saturday online edition) as well as business content synergies with PLDT-controlled TV5.
Ray Espinosa, the outgoing head of PLDT’s media arm Mediaquest Holdings, noted that a deal to increase the group’s 30-percent interest could be finalized “soon.”
Meanwhile, consolidation remains the name of the game as Pangilinan said he was not stopping at Business World. PLDT also owns minority stakes in the Philippine Daily Inquirer (10 percent) and the Philippine Star.
“We are certainly increasing our [Philippine Star] stake,” Espinosa said. “Not in the Inquirer, we are happy where we are.”—Miguel R. Camus
Attack fizzles out
Questions were asked and flames were fanned. But at least one attempt to cast doubt on the dealings of conglomerate San Miguel Corp. seems to have fizzled out.
Biz Buzz learned recently that the Commission on Audit has affirmed the validity of the sale of the Social Security System’s shares in Manila Electric Co. to SMC Global Power Holdings Inc. (formerly Global 5000 Inc.), which is a wholly owned subsidiary of SMC.
Allegations of anomalous business between the state-administered pension fund and the conglomerate surfaced as early as two years ago after a resident COA auditor questioned the share sale. This resulted in an investigation to determine if anyone should be held accountable for the transaction that allegedly resulted in significant losses to the government.
The COA auditor claimed that P76.3 million more in interest should have been collected by SSS from SMC for the deal.
But the current SSS administration disputed this finding, explaining that SMC “availed itself of an extended period for its first installment payment, which is allowed under the share purchase agreement (SPA).” SSS added that it actually earned an additional P104.1 million due to the high interest rate of 9 percent a year charged on extended payments.
COA’s most recent decision affirmed the SSS position, saying the SPA “constitutes the law” between the parties. Since the terms of the contract “are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulation governs,” COA noted.
COA explained that “courts have no authority to alter a contract by construction or to make a new contract for the parties. The court’s duty is confined to the interpretation of the contract.”
Incidentally, the former name of the SMC-controlled holding firm, “Global 5000,” is also the name of a Bombardier business jet in the conglomerate’s fleet.—Daxim L. Lucas
Oil drilling woes
Stocks of Trans-Asia Oil and Development Corp. (TA) slumped 10 percent last Friday due to jitters at the offshore Palawan oil exploration service contract 55 (SC55), where drilling could not begin as targeted for lack of clearance from the Palawan Provincial Council for Sustainable Development (PCSD).
Friday’s selldown was triggered by a disclosure in Australia filed by consortium member Otto Energy, saying that SC55 operator Anglo-Australian firm BHP Billiton (earlier castigated by the Department of Energy for the delays in its drilling program) had to invoke force majeure to re-calibrate the disrupted timing of its work program.
The clearance was originally expected in September last year but BHP was asked to submit a “socioeconomic development program” before PCSD would give its imprimatur. Sources privy to the consortium’s dealings say that while giving back to the community was good—and something that the consortium is willing to pursue—it was not something to be solicited or demanded from them, especially if it was not part of the original deal.
From the investors’ point of view, it was difficult to agree to “other” things on the table without incorporating them in the actual agreement because those items would be difficult to justify to their shareholders.
“Foreign investors such as BHP are sensitive to such things because those may be misconstrued as bribery,” said one source close to the SC55 consortium (which is 60-percent controlled by BHP Billiton, 33-percent by Otto Energy and 6.82 percent by TA).
The PCSD, for its part, wanted to secure more benefits for the province, lamenting that it was getting “too little” from other big resource projects like the Malampaya gas project, our sources said.
They must be thinking, is it too much to ask these concessionaires who are extracting their resources to build more schools or contribute more to the communities?
The good news is that the SC55 consortium is still committed to this project. But this case is another test on how the state will balance the interests of investors with those of local governments and the grassroots in a way that will not create an ugly precedent or hamper investor interest in capital-intensive deepwater oil drilling prospects.—Doris C. Dumlao
The MVP group of companies recently won a slew of honors at the recently held Asian Excellence Recognition Awards given by Hong Kong-based Corporate Governance Asia journal.
Named “best CEO” during the affair was Jose Ma. Lim, president of Metro Pacific Investments Corp. (MPIC) while the firm was also recognized for having the best investor relations unit in the region.
MPIC was also recognized for having the best investor relations website, the best corporate social responsibility program (the “Tulong Kapatid” telethon in the wake of Typhoon Pablo) as well as the best chief financial officer in Asia in the person of David Nicol. Whew.
Incidentally, the MVP group has now consolidated the public relations efforts of its diverse set of corporations and interests under one unit, run by former Press Secretary Mike Toledo. Interesting times.—Daxim L. Lucas
Does the transfer of Noel Lorenzana to TV5—to head the country’s third-largest television network—have anything to do with the corporate calisthenics within the PLDT group? Word on the street is that Lorenzana has been given two years to end TV5’s financial troubles and turn it around. (The “or else?” part is still unclear at the moment.)
Lorenzana was plucked from Smart Communications after the TV5 top post was passed up by Maynilad Water Services Inc. chief Ricky Vargas, who reportedly chose to stay at his present post, which in itself is challenging, but has a financial condition that allows its officials to sleep better at night.
The buzz back at Smart, meanwhile, is that Lorenzana will be replaced by Charles Lim, who used to head Digitel. The reshuffle is part of the bigger reorganization within the MVP group of companies, but it may also have something to do with the inroads that rival Globe Telecom had been making in growing market share in the postpaid mobile phone segment (its network difficulties, notwithstanding).
Meanwhile, there’s talk that one official at the country’s largest telco was asked to leave because of suspicions that he had been receiving “commissions” from third parties and that activities he organized were overpriced. Interesting.—Daxim L. Lucas
Renowned CEO and philanthropist Loida Nicolas Lewis was said to have regarded Ricky P. Vargas, president of Maynilad Water Services Inc., as a “miracle worker” for leading the water concessionaire when it was undergoing a difficult transition toward improved organizational efficiency.
This was after Vargas’ recent presentation about the growth of Maynilad before other business executives of the Philippine-American Chamber of Commerce in the US.
In his talk, Vargas said that prior to the privatization of water and wastewater services, only 60 percent of Metro Manila had water. The West Zone, where Maynilad currently operates, also had the oldest pipes in Asia. With the re-privatization of Maynilad in 2007 and with Metro Pacific Investments Corp. and DMCI Holdings Inc. taking over the troubled water company, Maynilad was able to increase its customers by more than 58 percent to over 1 million accounts from only 677,985 accounts in 2006.
Of its current customers, 96 percent have 24-hour water supply—a dramatic increase from the 32 percent that enjoyed the same service level in 2006.—Amy R. Remo
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