Biz Buzz: PAL-for-cash deal in the offing
After an initial flurry of negotiations, a long lull seems to have settled on Philippine Airlines (PAL) regarding the ownership tug-of-war between tycoons Lucio Tan and Ramon Ang.
Recall, of course, that Tan offered to buy back the 49 percent of PAL he had sold to San Miguel two years ago for $372 million in cash, and the balance of $800 million over a two-year installment period (for a total of $1.17 billion).
Word on the street, however, was that Ang was lukewarm to this offer (to put it mildly) since it carried no guarantee that the $800 million would, in fact, be paid.
“RSA (Ang’s initials) doesn’t want any promises. He wants cash,” said one source familiar with the deal.
Well, it seems that the message was conveyed clearly to the Tan camp.
The latest scuttlebutt is that “Kapitan” is mustering his resources—specifically, his liquidity—to buy back PAL from San Miguel in cold hard cash.
Ang, of course, loves airplanes and PAL is especially close to his heart, as he has devoted a lot of executive time over the last two years to bring the flag carrier back to today’s level of profitability. But having an extra $1 billion to add to San Miguel’s $5-billion cash stash isn’t a bad deal either.
“No doubt [Tan] has the resources [to buy PAL back]. The question is, if he has $1 billion in liquidity readily available,” the source added.
We should know soon enough. Daxim L. Lucas
MVP’s waste-to-energy
The group of Manuel V. Pangilinan is embarking on a new project that over the long run could produce for the country 300 megawatts of energy and 500,000 liters of diesel a day using waste materials.
This will use a technology called pyrolysis—defined as a thermochemical decomposition of organic material at elevated temperatures—which is widely used in other markets like South Korean.
Metro Pacific Investments Corp. president Jose Ma. Lim announced yesterday that the board had agreed to pursue the waste-to-energy pilot project in Tagum, Davao (near a landfill), which will initially be able to produce 2 MW and 10,000 liters of fuel a day.
The project is estimated to cost from P600 million to P700 million and the output can be expanded to 6 MW.
The group has tied up with the technology provider, Global Green International Energy Philippines, which will have a 30-percent interest, to pursue this project. Construction of the facility, which will take about six months, will likely start next year.
It is a project seen to have a significant social impact, addressing both waste disposal and power requirements, Pangilinan said. He added that this was in line with the plan of the First Pacific group’s investee sugar company—Roxas Holdings Inc.—to embark on co-generation initially in Negros and then in Batangas using bagasse (sugarcane residue) to produce power.
If successful, MPIC will roll out similar projects in other locations around the country, to reach the potential scale reported above. Doris C. Dumlao
Valentine’s Day gift?
If motorists think Metro Manila’s traffic conditions are a nightmare today, just imagine what the capital district’s highways would look like during the traditional Christmas rush.
It therefore would be a nice yearend present, especially for those living in Metro Manila’s southern areas, for the Ayala group to open the 4-kilometer Daang Hari-SLEx road link project this year.
But it seems even that target could be delayed a few months to February 2015 due to poor weather conditions.
Ayala Corp. managing director John Eric Francia said the group was working round the clock to get it finished this year, but with heavy rains and typhoons hitting the country, they might make it a “Valentine’s Day” gift instead.
“We want to compress the timeline and we are doing as much as we can,” he noted. He said they only obtained “full clearance” early this year to finish the expressway after resolving a thorny interchange issue with South Luzon Expressway.
The road, the smallest in the public private partnership (PPP) pipeline, is still considered significant given that it is the Aquino administration’s first PPP project.
The project was awarded in 2011, which seems like a long time ago given that bids then still fell below the P1-billion mark (Ayala bagged the project with a P902-million offer) versus the large sums being paid out today.
While that is a testament to how successfully the projects are being marketed and structured, the Daang Hari’s experience also highlights uncertainties—no matter which party is causing it—even after a project is awarded. We only hope such events could be minimized in the larger projects yet to come. Miguel R. Camus
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