Biz Buzz: Coincidental timing?
IF YOU think that the timing of latest complaint against the old Meralco deal being raised at the Office of the Ombudsman is funny, well, you may be on to something.
And, if some observers are to be believed, the timing of the complaint—coinciding with the onset of the heated election season—makes things even more interesting.
To recall, the Office of the Ombudsman announced last week that it was investigating a so-called “sweetheart deal” in 2009 wherein the Social Security System (SSS) approved a block sale of its Meralco shares to a company called Global 5000 Holdings controlled by businessman Roberto Ongpin.
But was it really a sweetheart deal? When the deal to sell the Meralco shares of the SSS (along with the Government Service Insurance System) was made at P90 apiece, the stock price of the power distributor was actually trading at around P60 a share. Thus, the sale price was made at a significant premium.
All told, government financial institutions involved in the deal made a windfall profit of P17 billion from the deal, according to a research note published by Macquarie Securities in 2011, which also assailed the 20/20 hindsight used by the deal’s critics who pointed out that Meralco’s share price hit P300 a share a few months after this.
Macquarie—which is also one of the biggest stockbrokers and investment banking firms operating in the Philippines—pointed out that GFIs like the GSIS, SSS, Lank Bank of the Philippines and Development Bank of the Philippines, in fact, sold their Meralco shares at the peak of the sub-prime crisis in 2008, “a time when stock markets had collapsed and lost more than half of their value.”
“On further analysis, we believe the GFIs’ disposals proved to be beneficial to them,” Macquarie said.
Now for the really interesting, and possibly election-related angle: Most of the people named in the latest Ombudsman investigation are known supporters—and more importantly, potential funders—of the presidential aspirations of either Sen. Grace Poe or Vice President Jejomar Binay. Hmmm. Or maybe it’s just a coincidence. Daxim L. Lucas
Win-win solution
AS THE Aquino administration winds down, it seems that the battle royale between the SM and Ayala conglomerates is winding down as well.
Biz Buzz learned that one of the most contentious of the SM-Ayala turf war—the dispute over whether the so-called “common station” of the MRT-LRT line will be located at SM North Edsa or Ayala’s Trinoma Mall—is practically over.
According to a source familiar with the issue, SM has dropped its opposition to the Aquino administration’s plan to put up an MRT station in front of Trinoma Mall… as long as the actual common station where three commuter train lines intersect will be located in front of SM North Edsa.
Never mind that both stations will just be about 200 meters apart as engineers can configure the stations in such a way that will (hopefully) minimize the wear and tear of commuter trains’ start-stop operations having two stations so close together.
We’re told that SM dropped its opposition to the plan after it received assurances from the Department of Transportation and Communications (DOTC) that the government would honor its earlier contract with the conglomerate—sealed in the previous decade—to build the common station in front of SM North Edsa (and for which the government has already spent millions of pesos for preliminary civil works).
We’re also told that the government softened its stance to relocate the common station to Trinoma after SM’s string of legal victories, which made the former realize that the conglomerate wasn’t to be trifled with, especially in the court of law.
In any case, the Ayala conglomerate will also end up winning in its own way since the MRT station to be build in front of Trinoma will be a key selling point for the multibillion-peso North Triangle mixed-use development it is currently building on the site. The MRT station will help channel foot traffic to Ayala’s malls as well as give critical access to commuters to the office and residential developments being built by Ayala at the site.
Finally, in the sense that it will get the long-delayed project moving, the DOTC looks like a winner, too—unless, of course, you factor in the fact that the government will now have to pay for the cost of two train stations, instead of just one. Daxim L. Lucas
Not loose change
THE GOZON group received more than P20 million to finally settle a public dispute with San Miguel Corp. boss Ramon S. Ang over the botched purchase of the shares in GMA Network, according to their camp.
“Not loose change” was how someone in the know described the “substantial amount” that GMA chief’s Felipe L. Gozon received upon the return to Ang of the P1 billion for the GMA shares.
Gozon has the documents on file, said the sympathetic observer.
It was also intimated that what broke the long drawn-out negotiations were the additional conditions for the sale such as the disclosure of the marketing strategy and the confidential trade secrets of the broadcasting giant.
Deemed unacceptable, the Gozon and Jimenez groups walked away from the negotiating table but still ready to entertain new—perhaps even old—
suitors. Tina Arceo-Dumlao
Fishy bank sale
THE GOVERNMENT’S privatization of GSIS Family Bank, owned by state pension fund for public employees, looked all set last month.
State-owned Government Service Insurance System (GSIS) tried several times in the past to get ride of the thrift bank, but could never get enough interest. The latest attempt was through a negotiated sale to Phindep Development Corp., a Cavite-based firm that claimed to have foreign principals.
Phindep offered to buy the bank for P502 million, or P1 million higher than the floor price set by GSIS. It may have seemed like a good deal for the pension fund, which wanted to get rid of the lender and all the headache that running a bank entailed.
What GSIS’ management did not expect, however, was the Bangko Sentral ng Pilipinas’ (BSP) refusal to play the role of rubber stamp in the transaction. As with all ownership changes in the banking sector, the BSP’s approval was required for the GSIS Family Bank sale.
According to our sources, GSIS failed to conduct the proper due diligence on Phindep before seeking regulatory approval for the transaction. The Inquirer reported last July that Phindep was incorporated just last March. The GSIS, we were told, failed to convince the BSP’s Monetary Board that Phindep had the expertise and financial capacity to run the bank. Based on its application, the GSIS made no attempt at all to know Phindep’s ability to enter the banking sector. The GSIS wanted the BSP to conduct the due diligence on Phindep, but that’s just not how things work, our sources said.
So what happens to GSIS Family Bank now? It’s still unclear what GSIS plans to do next. Perhaps the more important question is, why was GSIS willing to sell to Phindep at all? Paolo Montecillo
Bullish on Cebu airport
IT LOOKS like things continue to improve at the Mactan Cebu International Airport, which was turned over to the consortium of Megawide Construction Corp. and India’s GMR Infrastructure late last year.
Facilities and lighting are much better, and more food and beverage outlets are opening, as well as a new duty-free store. Everyone is waiting for that brand-new passenger terminal, of course, but that’s not coming until 2018.
Like Megawide-GMR’s aggressive bid to win the project, no expense is being spared but we feel another one of their key assets is the venture’s chief executive advisor, Andrew Acquaah-Harrison.
Harrison is not a local but he’s just as passionate about promoting the country—and Cebu—as any one of us. At a recent aviation summit, Harrison made a convincing pitch to participants that Cebu’s resorts were comparable, if not better, than world-class destinations in the Maldives.
At the end of the talk, even Transportation undersecretary Rene Limcaoco quipped that Harrison could be mistaken for a Department of Tourism official.
Expect more flyers to come to Cebu with the new management working hard to narrow what it described as a traffic deficit upon takeover.
The next step is to encourage more international traffic and Harrison urged our domestic carriers to mount direct flights between Cebu and the Middle East. Global competitors such as Dubai’s Emirates are already looking this way, we hear. Miguel R. Camus
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