Biz Buzz: Fireworks at Urdaneta Apartments

Upscale residential tower Urdaneta Apartments at the corner of Ayala Avenue and Edsa is sizzling despite the rainy season as some key initiatives—a waterproofing project and a sprinkler system—were questioned by some irate unit owners who alleged these were costly, unnecessary and undertaken bereft of transparency.

In particular, Daniel Vasquez and daughter Maria Beatriz Vasquez of the storied Madrigal clan have taken two of the Urdaneta Apartments Condominium Corp. (UACC) officers to court.

The Vasquezes had alleged before the Office of the City Prosecutor in Makati City that the two officers were preventing them from inspecting records such as the minutes of the unit owners’ meeting in 2013 during which the projects in question were supposedly approved by unit owners.

The two officers were accused of pushing the projects without affording them the opportunity to determine the “propriety” of the projects in alleged violation of their rights under Sec. 74 of BP 68 of the Corporate Code of the Philippines. This provision says “records of all business transactions of the corporation and the minutes of any meetings shall be open to inspection by any director, trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records or minutes, at his expense.”

The respondents, for their part, have denied the allegations, asserting in official court correspondence that the Vasquezes’ own representatives had previously agreed on the resetting of the inspection.

Nowhere did it provide that once a demand for inspection was made that the projects should stop, they argued.

They also claimed that the complainants were acting in bad faith by proceeding with the inspection while already filing the complaint days before.

The Makati City Prosecutor found probable cause to bring the criminal case to trial, saying that the documents requested by complainants were never made available and that there must be some proof of what had transpired during the meeting when the questioned projects were supposedly approved.

The arraignment of the two officers—who were sued in their personal capacities (it wasn’t the whole UACC board that was charged)—is expected soon.

Meanwhile, there’s a behind-the-scenes skirmish between the legal counsels of the feuding parties related to this issue but that’s another story for another day. Doris C. Dumlao 

Shopping for investors 

Tantoco-led SSI Group Inc. is best known for retailing luxury goods from European fashion houses like Hermès and Gucci to the more accessible US-based brands such as GAP Inc. but investors in those home markets aren’t necessarily the target in the overseas leg of an upcoming P12.4-billion IPO.

Dennis Montecillo, president of deal arranger BPI Capital, said preparations for an international roadshow in the coming weeks were underway but the plan was to confine this within the region.

The decision, of course, underpins Asia’s growing importance as a magnet for global money seeking higher yields, even if a relatively small amount ends up in the Philippines—for now.

This has apparently been a trend over the last eight years, he said. That shift likely accelerated due to the financial crisis in the United States that peaked in 2008.

“Most of the global investors who invest in Asia are in Asia, unlike the old days when you had to go to US cities and London,” Montecillo said.

Asia-only investment roadshows also help keep costs low. After all, these activities sometimes involve trips to several cities in a day, with five-star accommodations and business-class travel considered standard fare.

In Hong Kong, one could visit several major investment funds overseeing more than $1 trillion in assets in a single afternoon, Montecillo said.

In SSI’s case, it probably also helps that anti-corruption efforts in China and the subsequent austerity measures are dampening luxury prospects in the mainland, prompting their investors to funnel money elsewhere.

Those seeking to buy into SSI, which operates the popular Rustan’s chain and has 655 retail locations nationwide, won’t have to wait much longer.

SSI’s prospectus showed that it plans to launch the offer in October and list by November, just as wallets start to open for the Christmas shopping spree. Miguel R. Camus 

The devil’s in the details 

One foreign bank is making all the right noises when it comes to expressing its desire to invest in the Philippines.

In fact, no less than its top brass had expressed bullishness on the prospects of the local economy and promised to help fund the country’s growth. (It helped, of course, that their biggest rival in their home market already has its foot in the door, having been in the Philippine market for a couple of decades now.)

But the desire of its leaders for a presence in the country doesn’t seem to match the actions of the bank’s foreign representatives on the ground.

Biz Buzz learned that this foreign bank has been negotiating with a potential local banking partner for some time now. Although their principals (i.e., their owners) already “see eye to eye” in broad terms, it seems the foreign bank’s officials keep moving the goal posts. As a result, no agreement has yet been reached despite several weeks of negotiations.

According to one person familiar with the talks, the differences between the foreign bank and its potential local partner were “not that significant” in terms of price. But he pointed out that there were details that have yet to be ironed out.

This is probably aggravated by the fact that this foreign bank is in the middle of an important change in structure in its home market right now, making its officials on the ground “a little distracted,” according to our sources.

Incidentally, this is not the first time a potential Filipino partner has had difficulty negotiating with this foreign bank. As early as two years ago, this bank’s chair had shaken hands with a big local partner who had a mid-sized bank. But negotiations were difficult as the foreign bank’s officials supposedly kept changing the price or changing the contents of the package they wanted to buy.

One day, the owner of the local bank simply got tired of the talks and decided to pull out.

Let’s hope that this foreign bank and the potential local partner it is currently eyeing will have better luck. But don’t hold your breath. Daxim L. Lucas 

Wait-and-see mode 

Investors seem to be taking their sweet time deciding on whether to bid for any of the petroleum and coal exploration areas under the Fifth Philippine Energy Contracting Round (PECR-5).

Various investors asked about participating in the bidding have expressed concern that some of the areas might have been carried over from previous auctions or relinquished by previous takers. Still, others said investors might be concerned about risks in some areas.

Just recently, two Chinese hydrographic ships were reportedly spotted in the Recto Bank area off Palawan island in the West Philippine Sea, which is within the Philippines’ exclusive economic zone.

“Until that is resolved, we take the position that it is Philippine territory,” Secretary Carlos Jericho Petilla said during the PECR-5 launch earlier this year. Unfortunately he has (supposedly) taken a break from interviews, (supposedly) resting his voice after suffering from a ruptured vocal chord.

Meanwhile, other DOE officials have not responded to requests for comment on potential incursions in some areas that are up for bidding.

Well, investors have until February next year to decide whether they will go ahead and take on the risks by bidding. And most seem determined to cross that bridge only when February comes around. Riza T. Olchondra 

CIPC’s new power plants 

Calamian Island Power Corp. (CIPC)—a joint venture of Vivant Corp.’s wholly owned subsidiary, Vivant Energy Corp. and Gigawatt Power Inc. (GPI)—is doing its share to improve the country’s power situation by inaugurating two new power plants in Palawan.

The 7.7-megawatt Coron power station and 910-kilowatt Busuanga Power Station will supply the power requirements of Busuanga Island Electric Cooperative (Biselco) for 15 years.

Representatives from Biselco, the Municipality of Coron, the provincial government of Palawan, National Electrification Administration and Napocor graced the inauguration.

Biselco general manager Ruth Galang commended CIPC for accepting the challenge of putting up power plants in Coron and Busuanga to meet the island’s growing power demands.

“The inauguration of this power plant is a significant step towards continuous progress,” Coron Mayor Clara Reyes said as she fired up the newest power plant in her municipality.

Local officials and the business community welcomed the projects as important business investments that ensure reliable power supply. They said reliable power will significantly enhance opportunities for and improve the development of the island’s eco-tourism industry.

Vivant Corp. and GPI are also partners in Delta P Inc., the second largest independent power producer in Puerto Princesa City, which operates the 16-MW bunker-fired plant that provides a portion of the energy requirements of the Palawan Electric Cooperative. Good job. Daxim L. Lucas 

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