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Biz Buzz: Win or lose

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The sharp rise of JG Summit shares in the last two days (up 9 percent), according to some stock pundits, may be related to the unfolding Okada casino payoff story.

Despite reports that this casino gaming deal may be at risk, it seems that it has even become a blessing in disguise for the group of taipan John Gokongwei.

The base case scenario for keen market observers is that, despite fresh reports of larger payoffs, Kazuo Okada-led Universal Entertainment Corp. would not necessarily lose its gaming license in the Philippines because it would be difficult to directly pin down the Japanese tycoon himself.

His people may take the fall since the pachinko mogul—who has disowned and even sued people who had allegedly made illegal money transfer—has a way out.

And if the $2-billion project remains in the hands of Okada, the JG Summit group (via Robinsons Land) is widely believed to be a frontrunner as the local partner.

By the way, in the event that Okada is found guilty, stock pundits say the other licensee holders also deserve to be scrutinized. They say that, if it’s true that the gaming licenses issued before were “for sale,” it’s unlikely that it’s only Okada or Okada’s associates who had coughed out money.

Meanwhile, even if Okada loses his Philippine gaming license, stock pundits say this worst-case scenario would not be too bad for the Gokongweis either, as this means that the license would be up for grabs. And we need not look too far to know who’s interested and capable of acquiring the slot.—Doris C. Dumlao

Lotto wars

There is, apparently, more than meets the eye in the ongoing tiff between the Philippine Charity Sweepstakes Office and Pacific Gaming Management Corp.

The problem started soon after the Aquino administration took power in 2010. In an effort to clean up lucrative contracts entered into by the previous administration with various private corporations, PCSO management asked all licensed lotto operators to meet with them and renegotiate the percentage of revenues that these companies take home. (A similar process was undertaken by Philippine Amusement and Gaming Corp., resulting in firms like PhilWeb Corp. swallowing their pride and agreeing to have their fees reduced, just to maintain good relations and goodwill.)

A source said PCSO had asked PGMC—the local unit of Malaysian conglomerate Berjaya—to cut its percentage take to 7.85 percent of total lotto sales (from the present 10 percent), but PGMC refused.

“They simply refused to make a concession,” said the source, even as PGMC’s rival, Pacific Online (operated by businessman Willy Ocier), readily agreed to the rate reduction. From then on, “relations [between PCSO and PGMC] were already on edge.”

Pacific Online’s strategy of giving in seems to have worked, however. The company was soon allowed to set up additional lotto outlets (now estimated to be “in the hundreds”) in the lucrative Luzon area, in addition to its Visayas and Mindanao franchise zones.

The moral of the story: It’s okay for you to take one step back if it means you’ll be able to take two steps forward.—Daxim L. Lucas

Co’s Cosco

After a speculative run in recent months, the play on Alcorn Gold Resources Corp. (APM) has reached its peak as plans for the company was officially unveiled in its definitive statement for a special stockholders’ meeting on December 11. On Tuesday, its shares were down 5 percent to P0.13 each due to the proverbial selling on news.

As it turns out, Chinoy businessman Lucio Co indeed plans to infuse into APM assets spanning across his group’s retailing, liquor distribution, commercial property development and oil storage facilities worth as much as P60 billion. To be renamed Cosco Capital Inc., APM will become the Cos’ holding firm, with the acquisition of a controlling stake in various businesses, including 67.29 percent of flagship Puregold Price Club Inc. APM will also absorb 100 percent of Ellimac Prime Holdings, 100 percent of Fertuna Holdings, 100 percent of Meritus Prime Distributions, 100 percent of Montosco Inc., 100 percent of Pure Petroleum Corp., 67.29 percent of Puregold Price Club Inc. and 80 percent of Premier Wine and Spirits.

Montosco, Meritus and Premier are exclusive distributors of brands of wines, spirits, beers and other beverages from Europe and the Americas, while Ellimac will be the holding firm for all businesses relating to the leasing and development of commercial properties. Pure Petroleum is a lessor to a number of petroleum companies of oil storage tanks and facilities inside the Subic Bay free port. The new businesses to be infused into Alcorn will add to its existing portfolio of oil/mineral assets, which will be spun off into a new unit.

After GT Capital, LTG and Cosco, there seems to be other groups taking the same route of consolidating core assets into holding firms, deemed as a proxy play to the domestic economy en route to a higher growth trajectory.—Doris C. Dumlao

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