Ayala Land gains edge over SM for Ortigas firm
MANILA, Philippines—Property giant Ayala Land Inc., through its Ortigas allies, has gained the edge over the Henry Sy group’s SM Investments Corp. in their rivalry for control of the Ortigas clan’s flagship property firm following more than a year of legal conflict that has revealed deep divisions in one of the country’s oldest landed families.
According to Inquirer sources with direct knowledge of the matter, the Ayala Land-backed Rafael Ortigas group, with support from the Catholic Church, has cornered five out of nine seats on the board of the Ortigas clan’s OCLP (Ortigas & Company Limited Partnership) Holdings following a general meeting on Friday.
But the saga is far from over as more legal action is expected between the Rafael Ortigas group and the faction allied with SM Investments, the Fernando Ortigas group, as the latter zeroes in on alleged violations of binding agreements between the two family camps, the sources said.
At stake are at least 55 hectares of prime land owned by OCLP Holdings, the developer of the Greenhills Shopping Center and parts of the Ortigas Business District.
Ayala Land, a full-range builder and already one of the country’s most successful developers of mixed-use projects, is seeking to further cement its position as a leading developer of central business districts.
SM Investments, owner of the country’s biggest shopping mall operator and its largest bank, is also aggressively expanding its property holdings.
The situation has been in a stalemate for more than a year as neither of the two Ortigas factions owns a controlling stake in OCLP Holdings.
Based on the previous count, the Rafael Ortigas group has about 47 percent against more than 40 percent held by the Fernando Ortigas camp, not including the shares held by minority stockholders.
One source claimed that the Catholic Church, the single biggest non-Ortigas family member shareholder, had given its “full support” for the Rafael Ortigas group.
“These developments were set into motion early last year when SM Investments agreed to buy the 34-percent stake of exiting shareholder HSBC. The deal, worth about $1 billion, also included the shares of both Fernando and Rafael camps,” the source said.
However, the Rafael Ortigas group, which initially gave its consent, backed out of the deal and switched alliances to Ayala Land, which it took as its strategic partner in June.
Joselito Santos, general manager at OCLP Holdings, did not immediately return calls asking for comment.
SM Investments’ chief financial officer Jose Sio also did not comment.
“We understand the annual stockholder meeting elected directors representing all sides of the Ortigas family proportionate to their shareholdings,” Ayala Land president Antonino Aquino said in a text message.
Aquino did not confirm whether the Rafael Ortigas group, their strategic partner, had the backing of the Catholic Church.
Friday’s meeting, postponed at least two times this year by court orders, has been controversial as the Fernando Ortigas faction said it violated an existing shareholders’ agreement signed by the two camps on Oct. 23, 2010.
The meeting was allegedly in violation of the agreement, which requires that a common slate for the board, including the president, should have been agreed upon by both sides.
But during Friday’s meeting, a new president and treasurer were elected by the Rafael Ortigas camp without this prior agreement, one source said. The Fernando Ortigas group is set to take “legal action” because of this, the same source said.
The Fernando Ortigas camp wants both groups to enter into arbitration proceedings, which would be in line with the shareholders’ agreement.
This agreement was partly designed to prevent a scenario where one faction can gain control of OCLP Holdings without the other’s consent, meaning both parties have to come to an agreement first to break any impasse. Miguel R. Camus