How does one help a visiting foreign journalist—who may not immediately be able to imagine the physical size of a project—realize just how big a real estate development is?
Why, by giving him a bird’s eye view, of course.
That’s exactly what SM Investment Corp. vice chair Teresita Sy-Coson did when she gave CNN’s Andrew Stevens a helicopter tour (with doors open on either side for the cameraman’s benefit) of the Sy family’s 74-hectare Mall of Asia complex. She also toured him inside the sprawling shopping mall, which is one of the world’s largest.
The Hong Kong-based journalist was in town recently as part of the network’s coverage of the World Economic Forum on East Asia, and interviewed the de facto leader of one of the country’s largest conglomerates. In it, Sy-Coson revealed the inner workings of the “family council” that now runs the business empire that covers malls, banking and real estate, among others.
She revealed that most business decisions are now voted upon by the family council composed of the six Sy siblings (of which she is the eldest). Inevitably, Stevens asked hypothetically how 3-3 voting ties are broken, and she said that Elizabeth, Henry Jr., Hans, Herbert, Harley and herself usually talk it over before reconvening for another vote.
During the interview, Sy-Coson also praised President Aquino’s anti-corruption campaign, even as she noted that cleaning up the entire government bureaucracy would be a long-term endeavor.
Back to the aerial tour she gave the visiting CNN journalist, Biz Buzz asked Sy-Coson what kind of helicopter she owns. The business-focused magnate replied: “I don’t even know what kind of helicopter that is, just like I don’t know what kind of car I have or am riding.”
Five minutes later (after consulting her staff) came a follow-up reply: “Eurocopter.”
We asked around and learned that it was a Eurocopter EC135, whose “suggested retail price” is around P200 million—peanuts, really, when you’re part of a $12-billion business empire. Daxim L. Lucas
Control tower ‘lagayan’?
Anyone who has driven in the Philippines knows that things can get a bit hairy and the lack of discipline sometimes becomes the norm on the highway.
Unfortunately, this freewheeling mentality has been adopted by some of our commercial pilots in airports outside Manila. That means situations where pilots actually cut in line just to secure an earlier flight and control tower operators are pressured to let them get ahead.
The situation has worsened to the point that the Civil Aviation Authority of the Philippines gathered senior executives of airlines two days ago to crack the whip.
“Just like on Edsa, there is no more driver discipline. This is also disappearing with our pilots,” CAAP deputy director general John Andrews said.
In the past, pilots would be given a departure time, which is important in coordinating arrivals in busy airports like the congested Ninoy Aquino International Airport in Manila.
But some airlines, instead, board their passengers up to an hour earlier and once doors are closed “pressure” the control tower to release them for takeoff.
The result is that passengers wait inside the plane longer and with the slotting system not being honored, congestion actually worsens in Manila.
Andrews said the new rules would bar airlines from boarding passengers until 20 minutes before scheduled departure. The result, he said, is that passengers wait inside the plane for a shorter period—no more than 20 minutes—and congestion eases, somewhat. Sounds like a winning scenario for all. Miguel R. Camus
PNB’s migration
Instead of one big migration to the Makati central business district, “Kapitan” Lucio Tan-led Philippine National Bank now plans to slowly phase in the relocation of its headquarters from the vast PNB Financial Center in Pasay.
Thus, the relocation will probably be executed over a span of 12 months, said PNB executive vice president Horacio Cebrero.
As earlier planned, PNB will use the head office of Allied Bank along Ayala Avenue, but some of its operations will be kept at the existing financial complex in Pasay to temper the higher cost of settling in Makati.
Cebrero told Biz Buzz that most likely, two floors of the existing structure in Pasay may still be occupied by some of PNB’s units in the near term while the rest will be vacated and rented out.
“There had been a lot of orders for short-term lease, three to four years, while they come up with a masterplan: either a joint venture or to develop the [Pasay] property,” Cebrero told Biz Buzz.
The 11-story PNB building, which has a large office space of about 6,000 square meters per floor, was valued at PNB’s books at around P10 billion as of last year (but its market value may be over P15 billion).
Cebrero said the units that would relocate to Makati could fit into the Allied Bank building because PNB Savings Bank would be housed in the former Petron building in Makati City.
Meanwhile, PNB is expected to earmark P600 million to hike its interest in Allied Commercial Bank to 100 percent from 91 percent. Full control is needed for the China-domiciled bank to be allowed to expand operations in Asia’s largest economy. Doris C. Dumlao
Cebu power wars
The privatization of the 153-megawatt Naga power complex in Cebu province may be in for another twist.
Therma Power Visayas Inc. (TPVI), a member of the Aboitiz group of companies, gave the highest bid to acquire the asset during an auction in March, but listed firm SPC Power Corp. (SPC) wants to exercise its right to give a heftier offer.
State-owned Power Sector Assets and Liabilities Management Corp. (PSALM), which is privatizing the asset, sought the opinion of government lawyers. But before that was handed down, SPC wired to PSALM the amount of P1.14 billion representing a 5 percent premium over the winning offer.
However, government lawyers said SPC’s right to top was based on an existing land lease agreement (LLA) on an adjacent gas turbine area, and that the same period would govern its purchase of the Naga complex.
The trouble is that the existing LLA runs out in 2020, leaving SPC with just six years. SPC believes it should have the new 25-year LLA that came with the bidding of the Naga complex.
In a new twist, speculation floated mid-week that the Office of the Government Corporate Counsel may reverse its opinion or that SPC’s lease term may be extended from six years to 25 years.
Sources say the push is coming from a high-ranking official at the Department of Finance.
SPC Power is said to have until today, May 30, to confirm it will exercise of its right to top the highest bid before it loses all rights to the power asset. Also today, PSALM is said to be up for a board meeting to formalize its position on the matter. Riza T. Olchondra
Helping the upgrade
The government and the private sector are still rejoicing over the recent credit-rating upgrade given by Standard & Poor’s on the Philippines, but few are aware of one crucial element that helped make the upgrade happen.
Biz Buzz heard that the Bangko Sentral ng Pilipinas (BSP) played a large part in the upgrade by showcasing the Philippine government’s achievements to visiting S&P executives last March.
One of the areas BSP focused on was the much-maligned Public-Private Partnership program. But instead of harping on what could be achieved under PPP, we’re told BSP highlighted a big program that has already been reaping rewards for the country for many years: the Malampaya deep water gas-to-power project.
The Malampaya project is the outcome of a public-private partnership, spearheaded by the Department of Energy and developed and operated by Shell Philippines Exploration, B.V. (Spex).
In particular, Spex briefed S&P associate director Agost Benard and director Takahira Ogawa about the project. They even arranged an onsite helicopter fly-by for the party.
Two months after the briefing and the visit to the Malampaya gas platform, S&P raised the country’s credit rating to a notch above investment grade.
To be sure, the Shell people aren’t claiming the credit for the upgrade. But nowadays, they share knowing smiles and pat each other’s back knowing they did their part. Daxim L. Lucas
Unattractive LRT deal?
Perhaps one of the biggest surprises during the bid submission of the P65-billion LRT-1 extension project to Cavite last Wednesday was that San Miguel Corp., one of the country’s most aggressive conglomerates, did not participate.
SMC was expected to join and its bid boxes were all there at the Transportation Department’s headquarters ahead of the 2:00 p.m. deadline, but it was ultimately a “no go.”
The reason had to do with returns and San Miguel, after doing all the math up until two days before bid submission, decided its money would be sitting on the project too long—at least two decades long, SMC president Ramon Ang said Thursday.
“We really wanted to bid,” Ang said, but added that waiting for money to return until the latter half of the 32-year concession period did not make sense for SMC.
The six other bidders that did not participate felt the same way.
DMCI Holdings’ chief financial officer Herbert Consunji noted that even with the revised terms, the LRT-1 PPP “was not commercially viable.”
This left the tandem of Ayala Corp. and Metro Pacific Investments as the sole bidder, and assuming they qualify, could bag the project next month.
But perhaps the Zobels- Manuel V. Pangilinan partnership, which won the the automated fare collection system PPP earlier, sees something everyone has missed. Only time will tell. Miguel R. Camus
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