Biz buzz: Lim versus Lim
A business forum on airports Thursday got interesting but not just because of the subject matter itself, which was about the possible location of a new Manila international air gateway.
That’s because two of the main guest speakers, who have been making completely contradicting statements for months now, had the opportunity to face each other in a crowded hotel ballroom in Makati City.
For a brief moment during the Philippine Chamber of Commerce and Industry forum, there was a rather tensely polite exchange that amounted to a Lim versus Lim.
We are referring to unrelated individuals Roberto Lim, aviation undersecretary at the Department of Transportation, and Edmundo Lim, vice chair at All-Asia Resources and Reclamation, which proposed a P1.3- trillion reclamation effort for an airport, seaport and industrial zone in Sangley Point, Cavite.
Those following this space closely would know that this row, let’s call it that, had to do with whether All-Asia’s proposal had been accepted as an unsolicited proposal to begin with.
Private-sector Lim insisted they had submitted all requirements while public-sector Lim said the proposal did not conform with the requirements under the build-operate-transfer law. As such, only San Miguel Corp.’s P700-billion airport proposal in Bulakan, Bulacan, was being evaluated.
On Thursday, both Lims had the opportunity to say what they have been saying publicly all along, only this time, to each other.
No resolution came out of that encounter though. But private-sector Lim said he was open to meeting with the DOTr and if need be, resubmit their proposal.
Of course, the controversy doesn’t appear to end there, because a new airport issue appears to be brewing— also from the same forum.
During the event, public-sector Lim revealed that JG Summit Holdings and the Filinvest Group submitted an almost P187-billion unsolicited proposal early this year to develop and operate Clark International Airport.
But it turned out Megawide Construction Corp. and India’s GMR Infrastructure submitted a similar proposal in July last year.
The issue? Public sector Lim said the Megawide-GMR’s proposal had been “discontinued” because it was submitted before they formally opened the door to unsolicited proposals. Last we heard, Megawide was less than pleased with this statement.
Watch this space closely, folks. —MIGUEL R. CAMUS
Airport scramble
As a not-so-surprising offshoot of the government’s decision to bid out the five airport public private partnership (PPP) separately instead of taking in one private sector partner/consortium for the entire bunch, some foreign big players may drop out of the game.
Metro Pacific group’s French partner, Aéroports de Paris of France, for instance, has officially pulled out of the bidding process. “The unbundling resulted in the individual airports being small so if they win in just one of the smaller airports, they will not be able to get the returns that they need,” said Metro Pacific Investments Corp. (MPIC) president Jose Ma. Lim.
That said, MPIC itself is still interested in some of the individual airports and is now looking for a new partner. “Davao, by far, is the most attractive, then I guess Ilolio. The other three (Bacolod-Silay, Laguindingan and Panglao) will be quite marginal. We have to see the terms,” Lim said.
Proponents of the unbundling say the government must not be tied down to long-time concession period as this will constrain further expansion possibility before the end of the 30-year contract.
But what’s more interesting is what some people from the infrastructure sector theorize as the “real” rationale for the unbundling of the airport projects, which now puts the smaller projects at risk of being snubbed by investors with the expertise to handle them.
They ask: is this to accommodate local groups (close to the new administration) with smaller balance sheets which otherwise could not qualify to bid for the original bundle that lured big consortia? Suffice to say, the bidding of these airports will be under great scrutiny.
Some investors have been relatively tolerant of political noises because of the promise of a “golden age of infrastructure.” To date, they are still awaiting concrete progress on this. Investors are also awaiting plans to address bottlenecks in Metro Manila’s main international gateway. If the administration will be successful in rolling out one or two PPPs, market experts agree this will go a long way in boosting investor confidence. —DORIS DUMLAO-ABADILLA
PAL in waiting
What’s Philippine Airlines up to nowadays?
Well, apart from waiting for the deal to be sealed with its yet-unnamed “strategic investor,” the airline of tycoon Lucio Tan is also waiting— with bated breath—for the first of its six Airbus A350 XWBs which is slated for delivery next year.
In fact, PAL president Jaime Bautista told Biz Buzz that the flag carrier recently missed out on the chance to “jump the queue” for the A350 deliveries. There’s a long queue based on order backlog of 821 aircraft as of this year, of which only 65 have so far been delivered to airlines around the world. But a few slots opened up for early delivery. Unfortunately, these aircraft were nowhere near PAL’s specifications, so they passed up the offer.
And what specifications are we talking about? Well, for one, Bautista said PAL would be the launch customer for a new type of interior “mood lighting” whose color and brightness would automatically adjust for each phase of flight (brighter lights during meals, dim and darker hues when passengers are sleeping, etc.). All this is scientifically designed to reduce the effect of jet lag on the passengers. And they will need that considering PAL will use the A350 to fly up to 325 passengers nonstop from Manila to New York and vice versa. That’s a flight of at least 16 hours each way (PAL’s A350-900 variant can fly up to 19 hours nonstop and still be more fuel efficient that the existing Boeing 777-300).
More importantly for PAL, it will finally get to retire the older Airbus A340-300 aircraft which are less fuel efficient (using four engines versus the A350’s two) and can carry only 254 passengers.
More passengers per trip means higher revenues for the airline, and that’s what it needs nowadays, with competition on the rise. —DAXIM L. LUCAS
Rethinking IPOs for LSIs
Heeding suggestions from the market, the Philippine Stock Exchange plans to scrap the 10-percent discount that issuers are mandated to give to local small investors (LSIs) participating in initial public offerings (IPOs).
In the past, issuers often sought exemption from this discount rule, arguing that this would discourage IPO participation outside of the LSI allocation as the two-tiered pricing that may result in volatility upon listing. Corporate debutantes also complained that the discount only reduced net proceeds and added cost to what was already a tedious and expensive funding exercise.
Instead, the PSE plans to require—as part of ongoing revisions to listing rules—that issuers do a better job of reaching the grassroots. They will be mandated to create a distribution mechanism that will allow widespread IPO participation. This will include a marketing program to create awareness and encourage greater participation.
In the meantime, the PSE also heeded suggestions to adopt tiers for the maximum subscription amount to LSIs depending on offer size. The cap for LSIs will be P50,000 for IPOs with offer size below P5 billion and P100,000 for IPOs worth over P5 billion. The PSE also reserves the right to set another maximum subscription price on a case-to-case basis for IPOs beyond P5 billion.
In short, LSIs will be given a bigger share of the IPO pie but they now have to pay the same price that everybody else pays. —DORIS DUMLAO-ABADILLA
Trouble in Ecology Village
The normally quiet community of Ecology Village was upended recently when a group of what one resident described as “armed goons” entered the exclusive subdivision and took possession of one of the townhouses there.
But how could this happen, given the tight security in the villages in the area? Well, Biz Buzz was told that, a few days ago, a convoy approached the main gate and the lead vehicle stopped for the customary check at the guard house. As the vehicle was sporting an expired gate pass, the security guards took note and flagged it down. While they were distracted, another vehicle zoomed past and went straight to the townhouse which, as it turned out, is the subject of an ownership dispute.
And succeed in taking possession of the property they did, given that the men were armed with guns, easily ejecting the caretaker of the property who offered no resistance, we were told.
That was several days ago, and today, residents are starting to complain that the armed men are still in the village, specifically on the premises of the disputed townhouse. Many are worried about the dangers posed by these armed nonresidents to nearby homeowners, passing vehicular traffic (Ecology Village is basically one long residential strip bisected by one main road), as well as to the resident children who often play out in the street.
“It’s not so much about the property dispute,” complained one alarmed and upset resident. “We don’t want armed men here. They’re here illegally. No permission was given to them by the village.”
Which personality is involved in the townhouse takeover? We understand it’s a property dispute among siblings, who are children of a once prominent businessman in the 1970s and 1980s. The story of the long running dispute within this family is an epic saga, including long-running legal battles, including reports of physical violence in the past. The armed men are acting under the order of the “junior,” we were told.
Which family are we talking about? Here’s a clue: the Ecology Village townhouse dispute is literally happening in the shadow of the towering Alphaland Southgate building on the corner of Edsa and Chino Roces Avenue—a building whose construction was started in the 1980s by the patriarch of this feuding family. At one time, the family was the exclusive distributor of Toyota vehicles in the country. Easy, right?
But the residents of Ecology Village care little for family feuds. They just want their peace and quiet back. —DAXIM L. LUCAS
