McKinley West tiff
Three years after the group of property tycoon Andrew Tan bagged the right to develop the 34.5-hectare former Jusmag site in Fort Bonifacio—which is now rebranded as the McKinley West complex—Megaworld Corp.’s partnership with the state-controlled Bases Conversion Development Authority is put to a litmus test.
As BCDA took longer than expected to clear informal settlers in the area, Megaworld withheld the payment of some P874 million due to the BCDA last April. “BCDA did not clear squatters as promised and we are just negotiating with BCDA on the interest component as delivery was delayed by them,” said a source from Tan’s group, adding that this was all a “business matter.”
On the other hand, a government source said there was nothing in the contract that allowed Megaworld to unilaterally stop payment of its annual obligations, not even the delayed clearing of informal settlers. As the company has already been generating cash flow from the property through the pre-selling of residential units in that complex, the source said Megaworld was very much capable of remitting what’s due to the BCDA.
But while each party believed that it was the aggrieved party in this legal debate, there is a proverbial light at the end of the tunnel. BCDA has now been able to relocate all 500 households that previously hindered developments in the area, thereby addressing Megaworld’s concern on “deliverables” that were not fulfilled.
For its part, Megaworld has softened its stance against the BCDA’s demand, our sources said. So for this particular disagreement, unlike other corporate disputes that were recently in the headlines, there might be no need to go to arbitration. Doris C. Dumlao
Hands-on Tan
It’s not unusual for tycoons to let their executives or bankers do the talking during high-profile events like a company’s initial public offering.
But not Andrew Tan, the country’s fourth richest man according to Forbes Magazine, who took the stage and made a personal pitch to investors and financial analysts during the kickoff Friday of the domestic roadshow of Resorts World Manila operator, Travellers International Hotel Group. The $495-million deal begins marketing this week.
It was one of the highlights of the event and a logical move at that as Tan, a self-made billionaire, talked about his successes with now-prominent brands like builder Megaworld and liquor maker Emperador and his views on competition.
It’s true that Travellers started from a position of strength because it ran the first integrated gaming resort in the country and has a strategic partner, Malaysia’s Genting Group, which has a crucial international network.
But Tan’s underlying message was this: If he could build companies like Emperador and Megaworld from scratch, what more with Travellers.
“It was 34 years ago when I started my liquor company Emperador Distillers, we were the smallest liquor company in the Philippines and after 34 years we became the largest. Twenty four years ago, when I started Megaworld, we were just a small developer. We are also now No. 1 in residential high-rise and No. 1 in BPO [buildings],” Tan said.
Tan tied this message to the fierce competition in gaming —not just in the local arena but on a global scale as well. After all, once fully opened, Entertainment City in Manila Bay should be positioned to compete with gaming hubs like Singapore and Macau.
“Competition is something I love,” noted the tycoon, whose fortune was valued at $4.6 billion by Forbes. Tan’s holding firm, Alliance Global Group, has a current market value of P254 billion.
The presentation ended with the customary question and answer session. And guess what, no questions were asked. Miguel R. Camus
Tanduay’s US foray
It’s been three months since Tanduay Distillers Inc. debuted in the US market with the introduction of the Tanduay Asian Rum and, so far, the results are “encouraging,” according to a source from the Lucio Tan Group (LTG).
Kapitan’s liquor unit is hoping to break even from its US venture in three years’ time.
As Tanduay entered America during the western summer (starting June), Tanduay expects to sell 5,000 cases this first year, rising to 16,000 cases by 2014. By the third year or in 2015, it expects to hit the 100,000-mark—the critical volume (in cases) needed to break even on US soil.
Tanduay is aspiring to be a global player but unlike its peers, which established manufacturing capabilities overseas, its strategy is to keep its industrial base locally. Just exporting to the rest of the world is a more cost-effective strategy, the source says.
Established in the Philippines in 1854, Tanduay Rum ranks second only to Bacardi in worldwide rum sales volume. The “silver” and “gold” rum offerings to the US market both received “best buy” ratings from the Beverage Tasting Institute of Chicago and got a score of 93 from Tasting Panel Magazine in 2012. Doris C. Dumlao
Cash rich
Having raised more than P80 billion from the sale of its stake in Meralco (including a block sold a few weeks earlier), San Miguel Corp. is now sitting on a pile of cash that can be used for a host of corporate activities.
According to our sources, one likely and logical use for the funds would be for “liability management” activities at the diversified conglomerate. In particular, San Miguel is considering retiring some of its more expensive loans or even those which are shorter term in nature, thanks to the cash windfall from the sale of its stake in the power distributor to the Gokongwei group.
Used this way, the group would be better able to match its liabilities with the expected cash flow from some of its projects (like those in power and infrastructure), which are long term in nature.
Of course, there are also enough funds on the table for San Miguel to acquire another energy-related venture once the opportunity presents itself, according to San Miguel president Ramon Ang.
Meanwhile, Ang had only this to say to the naysayers and doubters of the conglomerate’s aggressive, debt-fueled expansion program: “Eat your hearts out.” Daxim L. Lucas
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