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Biz Buzz: MRT-7 buyout?

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Biz Buzz: MRT-7 buyout?

/ 07:03 AM May 20, 2015

Word on the street is that businessman Salvador Zamora II, the original proponent of the P63-billion Metro Railway Transit Line 7 (MRT-7)—a much awaited infrastructure project that will speed up commuting between Bulacan and Metro Manila— wants to sell his remaining 49-percent stake in the project.

That’s booking gains without awaiting any stage of completion, observers said.

SMC, through San Miguel Holdings Corp. (SMHC), acquired a 51-percent stake in this MRT-7 concession in October 2010 and therefore holds the right of first refusal on the remaining stake in Universal LRT Corp. Ltd. (ULC), which, in turn, holds the exclusive right, obligation and privilege to finance, design, construct, supply, complete and commission the MRT-7 project.

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The project was bagged by Zamora’s group by virtue of a concession agreement with the government circa 2008.

We heard that feelers had indeed reached SMC but no deal is to be expected at this time. It’s a price “na parang ayaw magbenta (at a level too lofty, it seems it’s not for sale),” one source said. The logical move, the source said, would just be for SMC to use that much money on the project itself instead of buying more secondary shares since it controls majority of it anyway.
MRT-7 is a “build-gradual transfer-operate, maintain and manage” project for the development, financing, operation and maintenance of a 22-kilometer light rail transit route that will extend from the MRT Line 3’s North Edsa terminal to San Jose del Monte, Bulacan.–Doris Dumlao-Abadilla

No retreat, no surrender

Like an earnest groom-to-be, businessman Ramon S. Ang says his intentions on local broadcasting giant GMA 7 remain “serious.”

Asked why he has not sealed the deal, so to speak, he compared the talks to that of a couple betrothed.

“If I were to marry you (addressing the press briefing’s participants) and suddenly you come to me with a child, of course I would want to know if that is your child and what else you have not told me,” he quipped.

He said that while “some” issues have cropped up in talks on his personal buy-in into the company, these were “small,” he said.

Would it affect the viability or the valuation? “I don’t know,” he said, adding that he has made a downpayment on the deal. “That’s what I am trying to find out. But I am not backing out. I am serious,” Ang added.

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And then, as if to diffuse the seriousness of the discussion, he said, “Gustung-gusto ko talaga maging artista (I really want to be an actor)!”–Riza T. Olchondra

Not us, says ICD

The Institute of Corporate Directors (ICD) has nothing to do with the Securities and Exchange Commission (SEC) policy that imposes limits on the terms of independent directors in Philippine corporations, contrary to the belief of some local business leaders.

Or so the ICD says.

Biz Buzz spoke on Tuesday to an official with an inside track to the goings on at ICD, and the official swore that the organization headed by economist and former Cory Aquino-era finance chief Jesus Estanislao was absolutely not involved in the SEC’s policy.

According to the official, the term limits on independent directors—which is being opposed by some business leaders and legal luminaries—were proposed by SEC Chair Teresita Herbosa, whom he described as “very independent-minded.”

As such, the ICD official said he could not envision a situation where the corporate governance advocacy group could dictate anything to the chief regulator of Philippine companies.

Nonetheless, the ICD official expressed unequivocal support for the SEC policy that, if affirmed, would limit independent directors’ terms on company boards to two terms of five years each, with a two-year break in between.

The opponents of the policy point out that mandating a regular “rigodon” of independent directors is a Western concept that is not applicable to the Philippine context (where, they say, there is a dearth of corporate luminaries who can be trusted to act in the interests of minority shareholders).

“ICD did not influence the term limit policy of SEC,” he said. “We were not even consulted on the shift from ‘no limits’ to 5-2-5.”

“Our country’s corporate governance regime, if it has to meet regional or global standards, requires that the regulators, the regulatees and the advocates must work together as Team Philippines,” he added.

But ICD clearly doesn’t believe in the assertion of corporate Philippines that longer, uninterrupted terms for directors would redound to the long-term good of companies.

ICD is also supporting an SEC proposal that would prevent local companies from concentrating too much power in one person by mandating that no board chair can act as the company CEO simultaneously—a policy which would affect some of the biggest and most illustrious conglomerates in the country.

And despite the handsome fees ICD collects for its accreditation programs for company directors, the official said the group remains an “advocacy” and not a “for profit” organization.

Of course, whether the critics of these policies will be mollified remains to be seen.

So the question remains: What will the SEC do?–Daxim L. Lucas

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TAGS: Biz Buzz, buyout, corporations, GMA7, Independent directors, Institute of Corporate Directors, MRT-7, Ramon Ang, San Miguel Holdings Corp., SEC policy
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