Biz Buzz: Casino industry sour grapes
It looks like the winning bidder which recently bagged a 15-year lease contract to house the newest gaming hub of the Philippine Amusement and Gaming Corp. in Manila has come under intense media attack from hidden detractors who want to scuttle its deal with the state-owned gaming regulator-cum-operator.
In recent weeks, a series of paid advertisements was published in major papers in an apparent attempt to cast doubt on the lease contract awarded by Pagcor to Vanderwood Management Corp. in December 2015 after a long and tedious 14-month bidding process.
Pagcor insiders say claims that the new casino site at the iconic Army Navy Club will obliterate public morals and corrupt the minds of the youth—because of the complex’s proximity to the Museo Pambata and Luneta Park—“have absolutely no basis in law and in fact.”
Biz Buzz sources in the gaming agency say that the belated attempt to discredit the deal may actually stem from pure commercial interest rather than patriotic zeal. For one, the sources said Museo Pambata is not a school, hospital or church. Hence, contentions that the prohibition against the establishment of night clubs, cabarets, dancing schools, pavilions, cockpits, bars, saloons, bowling alleys, billiard pools within a radius of 50 lineal meters from any public building, school, hospital or church doesn’t apply.
Moreover, claims that the transaction was a sweetheart deal is belied by the fact that the new building’s lease rate of P2,000 per square meter, complete with first-class amenities and state-of-the-art provisions required by casino operators, is significantly cheaper than Pagcor’s existing P2,600 per square meter lease in an “old, decrepit building,” the same sources stressed. Because of the lower rate, the gaming regulator is even poised to save a cool P200 million a year. Finally, the 12-month advance rental and six-month security deposit are standard lease provisions that all Pagcor lessors, past and present, reportedly enjoy.
It seems a disgruntled (sourgraping?) competitor who’s afraid of losing his foothold in the casino space lease business will do everything—including throwing the proverbial kitchen sink—just to maintain its vise-like grip on this lucrative trade. Besides, the current space it is leasing out to Pagcor will have no more productive use once its anchor tenant moves out.
Whether the attacks will wane or intensify in the coming days is the question on everybody’s mind. After all, the sourgraping competitor seems to have an ace up his sleeve with one family member recently moving up the political ladder. Daxim L. Lucas
Middle ground
A COMPROMISE deal seems to be shaping up among the technocrats of the Ayala and SM groups and the Duterte administration on what was a controversial location for the Metro Railway Transit (MRT) 3, MRT-7 and Light Railway Transit common station.
Subject to final approvals, the transportation department, Ayala Land and SM group are now talking of building the common station at the tip of the triangle in between Edsa and North Avenue. This is on a vacant one-hectare lot owned by the Ayala group but is likewise very close (as in 600 meters away) from the main building of SM North Edsa. The parties thus now seem to agree that this is the most suitable “middle ground” (being right at the middle of both SM and Trinoma malls) to put in the common station and will benefit all parties involved.
We heard that the big bosses of both Ayala and SM groups are now ironing out the prospective agreement with regulators, who have apparently given their nod on this new literal “middle ground,” ending the tug-of-war between the two property giants. The latest meeting on the prospective middle ground happened last Wednesday night.
The common station was to originally be located initially near the SM Annex via a 2009 agreement with the Light Rail Transit Authority under the previous administration. In 2014, the Aquino administration decided to move the location hundreds of meters away to an area near the adjacent Trinoma shopping mall. This sparked a legal battle and the SM group was afterward able to obtain a temporary restraining order from the Supreme Court.
Asked about this matter Thursday, San Miguel Corp. president Ramon S. Ang said as the proponent of the MRT-7 project that will connect the metropolis to Del Monte, Bulacan, SMC would abide by whatever the government decides.
Having the common station linking not only MRT-3 and MRT-7 but also LRT-1 (which was not part of the original concession agreement) is also seen as a bonus for all parties. Doris Dumlao-Abadilla
Power plant selldown
SAN MIGUEL Corp. is in talks to sell 49 percent of South Premier Power Plant, the independent power producer administrator of the 1,200-megawatt Ilijan power plant administrator, to Manila Electric Co. But the deal can be closed only once the court case against the Power Sector Assets and Liabilities Management Corp. (PSALM) had been resolved.
By taking in Meralco as a partner in this power plant, SMC president Ramon S. Ang, aka RSA, explained that this would ensure offtake of power production through 2022. On SMC’s other power plant in Limay, Bataan, Ang said the output was already being sold to various cooperatives, which means there’s no room to pare down stake in this plant.
Asked whether the group was still considering to list SMC Global Power Holdings Corp. on the stock exchange, RSA said this was still under study. The group is still considering whether bringing the power generation arm public was the best route in the first place and when the good timing would be. Doris Dumlao-Abadilla
Telcos’ legal
Goliath
AS READERS know by now, PLDT and Globe Telecom recently made good on their threat to take the Philippine Competition Commission to court for reviewing their joint P70 billion acquisition of San Miguel Corp.’s telecommunications unit.
One can tell how badly the telcos want this to sail through. They’ve assembled quite an array of the country’s best—and likely, most richly paid—legal minds in this landmark competition case.
We heard representing PLDT was Picazo Buyco Tan Fider and Satos Law offices as well as Angara Abello Conception Regala & Cruz (Accra) while Globe has Romulo Mabanta Buenaventura Sayoc & De Los Angeles as well as Villaraza & Angangco.
That adds on to the bright and feisty legal teams of the telcos led by Ray Espinosa for PLDT and Froilan Castelo for Globe.
At the heart of the row was whether the PCC had the right to review the deal that Globe and PLDT said deserved automatic approval. That “deemed approved” status was based on the PCC’s own transitory rules, since the deal was launched days before its IRR was released.
A technicality, for sure, but one that Espinosa said gives PLDT and Globe “a very good case.”
In view of the army of lawyers facing it, the PCC certainly looks outnumbered in this case. But one wonders: Is it outmatched?
The PCC is led by chair Arsenio Balisacan and four commissioners, all of whom have stellar credentials. Three of the commissioners are lawyers.
Of the three, El Cid Butuyan has extensive experience with anti-competitive litigation mainly from his work as head of Investigations and Litigation for the World Bank East Asia-Pacific Team.
This will be a closely-watched case, for sure, with its David versus many Goliaths angle. Like we say here, abangan! Miguel R. Camus
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