Rekindling the courtship
After last year’s collapse of a “nearly done deal” for the buyout of a controlling stake in “Kapuso” network GMA 7 by the group of businessman Manuel V. Pangilinan due to “regulatory risk-sharing” issues, it seems the two groups are getting cozy again, according to the grapevine.
The same regulatory risks are still there, but with the May 2013 senatorial/congressional elections over (unlike the burgeoning election fever in end-2012 when the last round of talks was terminated), these may be less… uhm… “costly” now.
“There’s some activity there,” a source from MVP’s camp said. But as to whether formal discussions have commenced, it remains to be seen or admitted by the parties involved.
To recall, after moving close to an acceptable pricing of P52.5 billion (the enterprise value for 100 percent of GMA-7) in late 2012, negotiations were derailed by the amount of advanced payment that the would-be sellers had wanted MVP’s group to lay on the table ahead of a congressional approval to consummate the deal. After all, getting regulatory approval may take longer than closing the deal itself, like what Philippine Long Distance Telephone Co. had to go through to seal its acquisition of Digital Telecommunications from the Gokongwei group, which attracted concerns over “monopoly.”
Meanwhile, industry sources said PLDT rival Globe Telecom is also on the prowl for a broadcasting business acquisition and is not necessarily limiting its options to ABS-CBN, where it has an existing “convergence” partnership. Doris C. Dumlao
Lotto peace deal
Remember the feud between lotto operators Pacific Online Systems Corp. and Berjaya-led Philippine Gaming Management Corp.? Well, it looks like that bitter dispute is now history.
According to our source, the chiefs of both firms—Pacific Online’s Willy Ocier and PGMC’s Paul Soo—have agreed to settle their differences to allow Philippine Charity Sweepstakes Office (PCSO) to roll out a new batch of lottery outlets.
At the height of the dispute, PCSO was prevented from adding new lottery terminals pending the resolution of a court case wherein Pacific Online and PGMC argued over territory (PGMC complaining about PCSO’s decision to allow VisMin-centric Pacific Online to set up outlets in the Luzon franchise area).
The idea for a peace deal was broached to PCSO by Ocier, who reached out to PGMC’s Soo and offered that both firms split the 800 or so new lottery outlets that PCSO needed to roll out. But for this to happen, PGMC had to agree to lower the rental fees it charged PCSO for the new outlets to 7.7 percent (existing charge is 10 percent), which is level with Pacific Online’s rates.
“It’s a win-win for everyone,” said an official. “Both Pacific Online and PGMC are able to open new outlets and PCSO will get more revenues for its charity operations while enjoying lower rates from PGMC.”
Speaking of Pacific Online, we heard that the holder of the lotto franchise for the Visayas and Mindanao areas was hit hard by Supertyphoon “Yolanda.”
A full 15 percent of its lotto terminals were either damaged or destroyed in Eastern Visayas, said Ocier, who noted that restoring operations in the affected areas was a complicated process and would take time.
“Even if you put in new machines, you first have to be assured of stable power supply and a solid telecommunications infrastructure,” he said. “More importantly, is there a local community to sell lotto services to?”
Luckily for him, Pacific Online now has Luzon outlets to help take up the slack. Daxim L. Lucas
Another PPP delay?
The bidding for the 27.5-kilometer Cavite-Laguna (Cala) Expressway under the PPP or public-private partnership—sometimes jokingly referred to by observers as Post-PNoy Projects—is originally set for January but some of the qualified bidders have requested for the extension of the bidding process purportedly to better study the project.
Cala is a four-lane tollroad that will connect the Manila-Cavite Expressway (Cavitex) and the South Luzon Expressway (SLEx) through the Cavite and Laguna provinces. The bidders are Ayala Corp., Metro Pacific Investments Corp., San Miguel Corp. and Alloy MTD.
As such, the special bids and awards committee (SBAC) of the Department of Public Works and Highways has recommended to Secretary Rogelio Singson to defer the bid submission to April. Doris C. Dumlao
Anti-mining?
In a move that surprised many industry executives, the Mines and Geosciences Bureau MGB recently sent letters to some mining companies warning them that their permits would be cancelled if they are unable to bring their mining projects into production.
Other mining firms were also warned that their exploration permits would not be extended for this reason or that. The MGB argued that these firms are not beneficial to the government since they are not contributing any income to the national coffers.
According to a Biz Buzz source, one such letter came from a low-ranking MGB official who was unaware that the mining firm he was threatening with a license revocation belonged to big names in business and politics.
(The letter is more interesting in the light of the fact that the mining firm is locked in an intra-corporate dispute and there are indications that the government is inclined toward one side of the fray.)
Rumors have it that the letter was ordered by Environment Secretary Ramon Paje himself. Mining officials couldn’t believe that Paje would undertake such a policy without the approval of “higher authorities.”
There is no love lost between Paje and the mining industry and several members of the latter have been clamoring for his replacement to little avail (even if his appointment has yet to be confirmed by Congress).
Major industry players can’t help but conclude that no less than Malacañang is really antimining (with mining executives citing last year’s Executive Order 79, which further tightens regulation on the industry, as proof).
As to the issue that these mining companies are not beneficial to the government, officials point to the case of the $6-billion Tampakan copper-gold mine—where Sagittarius Mines Inc. has spent $350 million without even extracting an ounce of gold. The firm has laid off 90 percent of its workforce, and the project now hangs in the balance.
Benefits? Just ask the communities where these miners are operating. Daxim L. Lucas
Mighty clueless
Yes, there was legal action initiated in the United States a decade ago against Mighty Corp. But, no, the Bulacan-based cigarette manufacturer was never aware of it “until a few days ago.” (They must have read about it in Biz Buzz.)
In any case, Mighty Corp.’s executive vice president and spokesperson Oscar Barrientos said the company was “never served summons, which is why we never got to respond or take proper action.”
He pointed out that the judgments passed on by the states of California, Oklahoma and Oregon “were all through a default, which means the judges ruled in favor of the plaintiffs because we, as defendants, failed to respond to the summons and make an appearance before the court.”
“Judgment passed on to us was not on account of being guilty, but on being unable to present ourselves in court,” he said, adding that the judgments could no longer be enforced against the company.
“We were actually surprised to find out how our company got involved in such a legal issue since Mighty Corp. is a small Filipino company with little global presence,” he said in a statement. “Despite producing international-grade cigarettes for 68 years now, we have not—at any point—sold any of our products in the US.”
The retired judge said the company— which is currently embroiled in a controversy over alleged anomalies that allow it to price its products cheaply, and thus undercut larger rivals—is “greatly puzzled” as to how it was dragged into the US legal issue since it was not even allowed to sell its products there (being unregistered in the US market).
Nonetheless, the company owned by the low-key Wongchungking family now wants the government to adopt the idea of a Master Settlement Agreement in the US and enact a law that would “protect small Filipino companies against ‘multinational monopolists.’”
As always, Mighty Corp. is open to any probe or investigation by concerned authorities,” he said. “We have no anomalous practices to cover up.”
Over to you, Philip Morris. Daxim L. Lucas
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