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Biz Buzz: Airline ownership coup

/ 12:38 AM September 30, 2016

It was a form of corporate turbulence that can be categorized as “severe” any way one looks at it. And the biggest casualty, of course, was the owner of this small airline, whose trusting nature allowed an alleged “unfair takeover” of his company by what were supposedly minority investors.

It all started when Mr. Owner was informed by his friend that a Cavite-based politician was interested in his small airline (small, but it operates two jet-powered aircraft), a wholly Filipino owned company which could be credited for boosting economic activities in some of the country’s best tourist spots to date.

The first offer for the “Jet” airline was made in 2013 when Mr. Cavite Politician had wanted to buy 5 percent of the firm’s shares for P5 million.

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At that time, the Jet airline’s value was estimated at P500 million over a five-year projection covering both physical and intangible assets. Mr. Cavite Politician then introduced Mr. Owner to another third party investor—whom we shall call “Sun Investor” in reference to his other business—who offered to acquire a 50-percent stake for P100 million.

Eventually, Mr. Cavite Politician wanted a 20-percent stake, while Mr. Sun Investor had sought a 60-percent equity.

Mr. Owner’s biggest mistake came in 2014, when he said he signed a deed of absolute sale in favor of Mr. Cavite Politician and Mr. Sun Investor, without demanding immediate payment nor copies of the documents, trusting the goodwill of these new partners. That proved to be a big mistake.

Over the course of 2014, the new shareholders took over, eventually edging out Mr. Owner in 2015, removing him from management, cutting off Mr. Owner’s salaries, with barely a pittance as payment for the 80 percent share.

Earlier this year, Mr. Owner received a call from a representative of Mr. Sun Investor, offering P2 million for his remaining 20 percent share in Jet airline. Mr. Owner was further warned that Mr. Sun Investor was ready to press charges against him for mismanagement.

It doesn’t seem like Mr. Owner—or maybe we should now renamed him “Mr. Former Owner”—is about to give up the fight, as he is hell bent on recovering what he says is rightfully his.

In whose favor will this corporate battle turn out? Let’s see if next week’s events will finally end the dispute as we hear that Mr. Owner is poised to make a “bold” legal move. Abangan! Daxim L. Lucas

What government wants …

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THE BIG news in transportation this week was the agreement on a unified railway station linking overhead trains in Metro Manila.

Of course, Transportation Secretary Arthur Tugade deserves recognition for bringing quite a collection of tycoons to the table despite the legal dispute the previous administration started and failed to resolve.

It was a big step forward in terms of the time and effort it took in getting the parties to just sit together and agree on something.

But for those reading the text of their term sheet a little closer, there was still more than a little uncertainty.

There was no fixed time frame, no fixed location (the “middle ground solution” placed it in the vicinity of “Edsa and North Avenue”), and of course, the Supreme Court injunction hanging over the whole issue was dependent on the final engineering design.

Recall that the lawsuit of SM Prime Holdings was triggered after the department in 2014 decided to move the proposed station’s location from SM North Edsa to rival Ayala Land’s Trinoma shopping mall. SM, taken by surprise, promptly sued for breach of contract.

We understand that more than losing the station, SM was really worried that such unilateral decisions on big infrastructure projects exposed their assets to other policies that could have business implications.

A vanishing station here means government could build another infrastructure project in its place. This makes it very hard, if not impossible, to plan for the future.

Yet, SM Prime officials led by Hans Sy were on the table this week along with tycoons Jaime Augusto Zobel de Ayala of the Ayala Group, San Miguel Corp.’s Ramon Ang and Metro Pacific Investments chair Manuel Pangilinan.

Moreover, the signing happened within the targeted 100 days of the Duterte administration.

Such cooperation among businessmen is not so common, which is why it makes news. Tugade touted it as the private sector banding together due to the “euphoria” created by Duterte’s administration.

That may be true. But to balance things out, we’re also hearing another narrative, one far less friendly. We don’t doubt that businessmen also want to do their share to help. But in recent circumstances, there’s apparently some degree of fear in the private sector.

After all, anyone can take a look at the swift fate of Roberto Ongpin’s Philweb, or even the mining sector.

One businessman told us that there was no choice but to cooperate with a popular administration. Another jokingly pointed out that thousands were surrendering in Duterte’s war on drugs.

“If we don’t cooperate, we might have to surrender our businesses, too,” the individual quipped. Miguel R. Camus

Looking (far) ahead

TV5 WANTS to strengthen its sports brand, and it’s looking ahead. Four years ahead, to be exact.

Incoming TV5 CEO Vincent “Chot” Reyes, a former basketball coach, said they were already in talks to acquire the exclusive rights to air the Tokyo Olympics in 2020 and the next event in 2024.

Of course, TV5 bagged that right to the recently concluded Summer Olympics in Brazil.

Apparently, those events come at a “humongous” cost, but the returns for the TV5 brand and the broader PLDT Group were well worth the cost.

“The Olympics is one of the most valuable sports properties in the world. We cannot not have the Olympics,” Reyes said.

TV5 trails rivals ABS-CBN Corp. and GMA Network in television ratings. So how does the No. 3 TV network in the country score such a prestigious event?

Dentsu Sports Asia, which holds broadcast rights for the Olympics in various jurisdictions, talks to all the major TV networks. But Reyes said he was confident about their prospects.

Of course, there’s that long-standing relationship between TV5 and Dentsu. But their edge also lies with TV5’s affiliation to the PLDT Group, which has access to millions of subscribers around the country.

Reyes noted that those behind the Olympics recognize the importance of various mobile and digital channels beyond traditional platforms like television.Miguel R. Camus

Jolly dance app

THE BEE has entered the digital space with the launch of its first mobile app “JollyDance Showdown.” It’s not an e-commerce/online ordering app but an entertainment app that uses augmented reality—the same location-based technology used by mobile gaming sensation Pokemon Go, one that superimposes a computer-generated image on a user’s view of the real world.

The new app developed by homegrown fast food giant Jollibee Foods Corp. allows children to experience JolliDance every time they buy a Jolly Kiddie Meal by scanning the Jolly Joy box. Not all kids have access to smart phones at such an early age, you might say, but there’s probably a critical mass out there who have access to tablets/iPads.

The app also allows users to create dance parties with the Bee and other Jollibee characters like Hetty, Popo, Yum and Twirlie. The user can play as a “DJ” for Jollibee using the app, by composing dance tracks and making Jollibee dance to these tracks. The user can also snap a selfie to join Jollibee and friends in special choreographed dance numbers.

Jollibee can of course monetize the app if it ends up boosting foot traffic at its stores. If kids demand to get these kiddie meals, mom and dad will have to take them more frequently to a Jollibee restaurant, and give them tablets or lend them their smart phones to tinker with. Doris Dumlao-Abadilla

E-mail us at bizbuzz@inquirer.com.ph. Get business alerts and a preview of Biz Buzz the evening before it comes out. Text ON INQ BUSINESS to 4467 (P2.50/alert).

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