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Sweet sale

/ 09:51 PM December 25, 2012

The single biggest stockholder of Victorias Milling Corp. unloaded its 24-percent interest in the sugar firm last Friday, possibly cashing out ahead of further tariff cuts under the Asean Free Trade Agreement (Afta). No, it’s not the Lucio Tan group but a foreign fund named CVI GVF Lux Masters, which has a more substantial (compared to the LT group’s 16 percent) interest in VMC but has chosen to become a passive investor. This fund got into VMC in 2004, initially taking out the equity held by BNP Paribas. Since it picked up its stake at a fire-sale at the time trading on VMC was still suspended, the long wait was over (and some say, was worth it).

Some 485 million shares of VMC, which only resumed trading on the local stock exchange last May, exchanged hands at P1 each. While an industry source pointed out to CVI as the seller, the buyer has yet to be identified. From what we gather, it’s not the LT group that bought it as the group of “Kapitan” Lucio Tan doesn’t seem too keen on raising its interest in the sugar firm.

Note that several days ago, there were rumors that San Miguel Corp. president Ramon S. Ang or RSA was buying into VMC. “Not true,” RSA clarified. Many months or years ago, First Pacific group’s big boss Manuel V. Pangilinan had also looked at some sugar firms and as one of the leading players, VMC was a prime suspect. MVP has since then been evaluating opportunities in the agriculture space, although on the sugar space, he has not identified any specific prospect.


VMC is a good example of a creditor-driven corporate rehabilitation story, but if the LT Group (through Tanduay Distillers and Philippine National Bank) is not too keen on beefing up interest, another “consolidator” will have to emerge in the future. Doris C. Dumlao

Banks versus BIR, Part II

The banking community is again at loggerheads with the Bureau of Internal Revenue after the latter came out with new rules to close what it felt was a loophole that allowed some high networth investors to dodge taxes on special investment vehicles.

According to our sources, Internal Revenue Commissioner Kim Henares wants banks’ trust departments—those financially independent units where the rich plunk in their millions (or billions)—to start levying withholding taxes on clients’ trades in corporate bonds and other securities, despite previously being thought to be tax-exempt.

In past practice, trust department clients could avoid having their trading earnings subjected to withholding taxes if their funds were committed to certain investment vehicles that were long term in nature. Since the BIR generally exempted from taxes those securities which had maturities of more than five years, banks treated these trades as tax exempt … even though the trust units traded shorter-term bonds.

Henares says that, henceforth, only investments in instruments that are specifically tax exempt, like long-term notes and certificates of deposits (LTNCDs), would escape the taxman. Everything else the trust units trade in, specially corporate bonds with maturities of less than five years … well … grumbling clients (and grumbling bankers) will simply have to pay up.

“They’re killing the market,” complains one banker. “We’re closing a loophole,” replies Henares. And the banks-versus-BIR saga continues. Daxim L. Lucas

Another PPP partner


The Philippines has gained another partner for its flagship public-private partnership (PPP) program: Taiwan.

Apparently, the Taiwanese government has promised “future cooperation” with the Department of Health (DOH) on medical PPPs. The Taipei Economic and Cultural Office in Manila said Health Secretary Enrique Ona was apparently considering implementing in Manila a program similar to one in Taipei. Given the need for upgraded public health services to help promote “inclusive growth,” a far-reaching medical PPP could be the way to reach more Filipinos without straining the government’s budget and manpower pool.

Like other PPP projects in the very long pipeline, of course, there is no word yet on when this new partnership could be implemented. That’s life.  Riza T. Olchondra

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