PPP’s bad cop
Who’S to blame for last week’s failure of bidding for the Light Rail Transit Line 1 extension project that would have made it easier for people to commute between Cavite and Metro Manila?
According to our sources, practically all bidders for the P60-billion project pulled out at the last minute due to “unattractive terms” set by the government in its terms of reference. “It’s so bad that there’s no way a private company could have turned a profit on the project, much less receive a decent return on their investment,” said one person familiar with the issue.
Another source noted the difficulty faced by the government in implementing a rate increase for the existing operations of the LRT and Metro Rail Transit Corp., whose money-losing operations continue to be subsidized by the government to this day.
“Do you think they will let us raise fares when the time comes?” asked the official.
Biz Buzz asked around and learned that, while the project falls under the ambit of the Department of Transportation and Communications, the crux of the problem lies with another official in another department who vets the financial aspects of these big-ticket infrastructure projects.
This official is, we’re told, the true architect of the lopsided contract terms (against the private investor) being forced into many infrastructure projects that eventually make them unattractive and no longer bankable.
According to our sources, this official is the designated “bad cop” in the whole public-private partnership (PPP) program—in the guise of wanting to protect the interests of the public—while his “good cop” boss goes around telling would-be investors that everything will be as all right.
“Many of the long-delayed projects can be traced to this,” the source said.
The sad part is that practically all of these projects being “re-litigated” at lower levels have already been approved by President Aquino at the Cabinet level. Insubordination on the sly? Daxim L. Lucas
On the block
After buying back its own shares from a unit of Philippine Long Distance Telephone Co., businessman Roberto V. Ongpin’s online gaming firm Philweb Corp. isn’t likely to lodge the shares as part of its treasury holdings. The last tranche of shares Philweb will buy from ePLDT is due this December but Philweb has the ability to fast-track its purchase of those shares if it wants to pool the shares and put them on the block.
Indeed, we heard that Philweb is considering to auction off the 22-percent ePLDT block, thereby unlocking more values out of these shares. While Philweb has no need to further expand its public ownership, now at 24.19 percent, the IT firm could use the proceeds for its expansion plans instead of locking them up in its treasury. But while it’s interested to find a new investor for this bloc (worth P4.58 billion at current market prices), it isn’t close to signing any deal at this time.
But is RVO’s 50-percent interest in Philweb, or at least part of it, up for grabs as well? Given that RVO is raising funds to buy out British fund Ashmore from property arm Alphaland Corp., some stock pundits theorize that paring his interest in Philweb could be an option for the tycoon as well. As to whether RVO is actually considering such trade-off, time will tell. Doris Dumlao
Rare Customs fan
President Aquino might have given the Bureau of Customs a harsh and probably well-deserved lecture during his most recent State-of-the-Nation Address, but for at least one company, that agency has been doing its job.
We’re talking about specialty food ingredients and plastics firm D&L Industries Inc., whose chief financial officer, Alvin Lao, said a decline in smuggling might have contributed to the stabilizing of its sales volume for refined vegetable oils, one of its products, in the first semester.
Smuggling and low commodity prices affected the company’s performance last year, analysts had said. Still, even as poor commodity values pulled down sales, D&L managed to post a net income of P655 million in the first half of 2013, up 16 percent, as margins improved.
D&L has been shifting to more customized and higher-margin products over the past years. These now account for 66 percent of sales compared to 48 percent four years ago, he said.
Even with signs of improvement, this did not mean that smuggling would cease to be a problem for the company, Lao admitted.
D&L, which is up about 59 percent since going public in December last year, has also been ramping up its analyst coverage. Lao said “all the big brokers know us.” The firm is covered by local houses like First Metro Investments, Campus Lanuza & Co. and COL Financial as well Maybank ATR KingEng and CLSA. Miguel R. Camus
Sun shines
Tycoon Andrew Tan’s Suntrust Home Developers Inc. has seen some interesting price increases in a market bereft of positive catalysts, with price per share surging from 57 centavos to P1.90 in the last three trading days. And in each of the last three days that it was asked by the PSE to explain the extraordinary action, the company said it was not aware of any material information other than what had already been disclosed.
The steep rise started on Aug. 14 when the company announced a stock rights offering entitling existing shareholders to subscribe to 2.5 new shares for every common share. The rights shares, to be offered at P1 each, will be issued from a P20-billion increase in the company’s authorized capital consisting of 20 billion common shares each.
Suntrust’s disclosure said proceeds of the rights offer “will be used to fund various investment opportunities,” which some stock pundits speculate to be a clue toward potential backdoor listing. As to whether Suntrust could indeed be the next backdoor ticket like AAI (now Bloomberry), Tanduay Holdings (LTG), Manchester (now Melco Crown Philippines) or East Asia Power Resources Corp. (now CPG), that’s the hot riddle in this ghost month. Doris Dumlao
Buyer beware
San Miguel Foods Inc. has a beef with gift certificates these days, or at least the counterfeit kind that’s been flooding Monterey Meatshop outlets.
An abnormal surge in the redemption of vouchers, “particularly in the Quezon City area,” apparently got San Miguel Foods’ attention such that it checked on the gift checks and found some to be counterfeit. Alarmed, the company promptly wrote to the Department of Trade and Industry (DTI) and temporarily suspended redemption of the gift checks in all Monterey Meatshop outlets nationwide.
What to do for hapless holders of valid vouchers? San Miguel Pure Foods said they “may centrally redeem their gift checks at the Monterey Meatshop outlet in Farmers Plaza, Cubao.” Those nowhere near the Cubao area may register their name and contact number with the outlet cashier so that the company can update them via text message and e-mail on when gift checks can be redeemed.
How to tell the real deal from the fake? San Miguel Foods counts the ways:
The series numbers indicated at the bottom right of the counterfeit gift checks are not within the official series numbers released to the market.
The series numbers of the counterfeit gift checks were manually stamped resulting into an uneven, misplaced and smudged impression. The original bear clear, clean, evenly spaced printed numbers that are slightly pressed onto the paper allowing one to feel a shallow indent in the numbers when touched.
The appearance of the last digit on the counterfeit gift check is either altered or distinctly different than the rest of the numbers. Where the last number has the same print type, (font), the impression is significantly darker than the other numbers in the series.
Some counterfeit gift check samples were found to have smooth paper surfaces. The original checks are printed on embossed paper that is textured on both sides.
And so, before you buy that gift check—for yourself, perhaps at a discount from a friend or as a practical present to loved ones—remember: Buyer beware. Riza T. Olchondra
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