If there is one party that stands to have a clear-cut gain from the merger of SM property units into SM Prime Holdings, it is the government. The Bureau of Internal Revenue stands to collect capital gains, transfer, documentary stamp and other taxes arising from the P279-billion share-swap transaction alongside fees to be paid to the Securities and Exchange Commission. The taxes and fees that the group would pay for the deal were estimated at P6.5 billion, said SM Prime Holdings chief finance officer Jeffrey Lim.
While some of the companies involved are publicly listed and their share transfer will incur preferential rates, the structure also involves the infusion of privately held SM Land and some unlisted assets. This is why the taxes arising from the deal—which will create the country’s biggest property company and one of Southeast Asia’s largest with a $14-billion market capitalization—are huge. It also provides an idea as to the value of the unlisted assets under SM Land that will be “backdoor-listed” into SM Prime.
Some of the privately held assets that will soon beef up SM Prime’s portfolio include 40 hectares of Pico de Loro leisure estate in Hamilo Coast, the 60-hectare land on which the Mall of Asia complex stands on, the hotels and convention centers under SM investments and some physical assets of the retail unit.
After the merger, the recurring income of the new company will still be very substantial at more than 50 percent, allowing the enlarged SM Prime to benefit in good times (from residential development income) as well as in bad times (as rental earnings are steady).
Ending some speculation that the consolidation would strain family dynamics, Henry Sy Jr. (aka “Big Boy”) will chair the enlarged SM Prime (“Tatang” Henry Sy Sr. will be chair emeritus) while younger brother Hans Sy will remain president. All’s well that ends well and what remains to be seen is how the market, which had all weekend to digest the structure of the deal, will react.—Doris C. Dumlao
In the limelight
When President Aquino goes to Nay Pyi Taw, Myanmar, for the World Economic Forum East Asia Summit this week, he is expected to trumpet the country’s recent economic gains and newly minted sovereign investment grade status. As such, the “stunning” 7.8-percent economic growth attained in the first quarter had come in very timely.
For this trip, the President will be accompanied by Secretary to the Cabinet Rene Almendras and Secretaries Cesar Purisima of finance, Florencio Abad of budget and management, Arsenio Balisacan of economic planning, Greg Domingo of trade and industry, Ramon Jimenez of tourism and Ricky Carandang of communications. National Competitiveness Council co-chair Bill Luz will also be there alongside some prominent businessmen like Jaime Augusto Zobel de Ayala and Enrique Aboitiz, based on the list of participants.
The President is flying to Myanmar just for a day (June 7) and unlike the Davos summit last January, he will speak in at least two public sessions, including the closing plenary. Southeast Asia, after all, is the star of this regional summit and the Philippines, the region’s fastest-growing economy, is seen attracting a lot of attention.
The President was scheduled to speak in an interactive luncheon session before an audience of at least 200 people, Luz said. At the closing plenary, Luz said Mr. Aquino and Myanmar President Thein Sein would speak in a “special conversation” session. Several private meetings are also being arranged at the sidelines of the forum. During the closing plenary, the Philippines’ hosting of next year’s WEF Summit is expected to be formally announced to the delegates.—Doris C. Dumlao
BSP’s top lawyer
One of the Bangko Sentral ng Pilipinas’ most talented and hard-working officials retired last week after a storied career in the banking industry, having experienced life both as a private sector and as a regulator.
We’re talking about BSP Deputy Governor Juan de Zuñiga Jr. who, until last week, was the central bank’s general counsel while also heading its resource management sector (in charge of printing money and mint operations, among others).
“Jun” to his friends, Zuñiga worked for the defunct Central Bank of the Philippines, went to the private sector, then returned when “CBP” became “BSP.”
Here, Zuñiga was at the forefront of the regulator’s fight against the P14-billion Legacy scam, as well as its long-running pitched battle with Banco Filipino. Indeed, during those high-stakes controversies, Zuñiga was one of the handful people in whom BSP Governor Amando Tetangco could put his unqualified trust.
Incidentally, “Jun” also oversaw the operations of the Office of Special Investigation, which coordinates with the Anti-Money Laundering Council.
And speaking of AMLC, its executive director, Vic Aquino, was promoted to deputy governor rank to take over Zuñiga’s vacated slot, while Elmore Capule is now in charge of BSP’s lawyers.
AMLC’s operations, on the other hand, will be headed by its former deputy director Julia Tacay-Abad.—Daxim L. Lucas
The long wait
If your Macbook Pro or some other laptop breaks down, expect a delay of up to three months if you intend to wait for genuine replacement parts to be acquired from official channels. Yes, three long months. This is because of issues regarding the issuance of import permits after the Bureau of Customs implemented the National Single Window system.
This scheme, according to Customs Commissioner Rozzano Rufino Biazon, is one where permits and clearances are issued electronically and sent to the Bureau of Customs via the network. The goal is to avoid the use of fake, forged or recycled paper permits.
Here’s the problem: The NSW is designed to accommodate a one permit-per-shipment issuance where permits should indicate the specific quantity in the shipment. On the other hand, the procedures of the National Telecommunications Commission (which must authorize the importation of electronic devices used for communications, computers included) allow for a blanket permit, which do not specify the quantity per shipment.
“This inconsistency is the reason for the delay in customs clearance,” Biazon said, saying that a solution was being worked out by both sides.
As many as 40 government agencies that issue import permits for various products are electronically connected to BOC for electronic transfer of information and documents. But one challenge that remains is to harmonize their systems.
Until that happens, you’ll have to wait for replacement parts from official retailers or repair centers. Or source them from the gray market if you can’t wait.—Daxim L. Lucas
Better half
MWSS Administrator Gerardo Esquivel answered the call to public service under close friend President Aquino more than two years ago, leaving his successful construction company at the hands of his reluctant spouse.
Fast forward to 2013 and it turns out Teresa “Beng” Yap-Esquivel, now president and CEO of Asec Development and Construction Corp., is quite the entrepreneur who has helped modernize and grow the firm amid a boom in the construction sector.
Asec Development celebrated on Friday its 20th anniversary, during which Mrs. Esquivel reported that projected revenues were expected to double this year after the company booked P3 billion worth of contracts as of April. She said profit margins were also going up.
Those close to the family, however, noted that they were not surprised at Mrs. Esquivel’s business acumen, citing how she finished cum laude in business administration at Menlo College in California.
Asec Development, like the Esquivels before the Aquino administration, has kept a low profile, preferring to let its more than 100 projects across the country speak for its standards. Most of the projects are in the private sector. These include Andrew Tan’s Richmonde Hotel in Iloilo, Crown Regency projects in Cebu and Boracay and several buildings within the Ateneo de Manila campus.
Being the wife of a top government official, there was no shortage of praise for Aquinomics on Friday following the release of first-quarter growth at 7.8 percent, the fastest so far under the current administration.
Hefty criticism, too, has been levied against Aquino’s economic policies, which many have branded as “jobless” growth.
But for individual players, the picture is not so bleak. Mrs. Esquivel said the company has grown from just a handful of workers in 1993 to more than 3,000 today, not counting sub-contractors. Assuming business would remain good, that figure would continue to rise, she said.—Miguel R. Camus
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