We hear that San Miguel Corp. chief Ramon Ang isn’t exactly ecstatic about giving up Philippine Airlines, which he nursed back to health for over two years.
There is no doubt that the flag carrier is in better shape as he hands over ownership back to tycoon Lucio Tan in a $1-billion deal.
In fact, we hear that PAL posted a net income of $5 million in August—a big turnaround from the $13-million loss reported in the same month last year.
More importantly, the airline recorded earnings of $30 million for the first eight months of 2014, which stands in sharp contrast to the $69-million loss reported during the same period last year.
It’s worth noting that the SMC chief is not in the habit of assuming the presidency of companies he acquires, preferring to leave them to professional managers. But he made an exception for PAL, sitting as its president and being deeply involved in its day-to-day operations.
Apart from helping the airline recover, financially, Ang also invested his personal time, resources and energy into getting the Philippines off the blacklists of the US Federal Aviation Administration and the European Union.
Of course, one of Ang’s principles is to never fall in love with his investments. So it’s not love. But with PAL, it must have been something very close to it.–Daxim L. Lucas
Fishing expedition
Too soon after uncorking the champagne to celebrate an order from the Supreme Court to stop Bureau of Internal Revenue chief Kim Henares from requiring the submission of an alphabetical list (aka “alphalist”) of portfolio investors receiving income payments and dividends, capital market leaders have buckled down to find ways on how to deal with a new BIR ruling feared to be a fishing expedition.
As expected, the BIR (unfazed by the high court’s temporary restraining order on the alphalist) issued on Sept. 12 a new revenue memorandum circular 73-2014 “clarifying” the withholding of tax rates on dividend payments to Philippine Central Depository (PCD) nominees.
Unless it is “satisfactorily” shown that the actual equity investor is a domestic corporation, the BIR said it would consider the income recipient to be an individual subject to final withholding tax of 10 percent.
In the case of non-Filipino nominees, unless it is “satisfactorily” shown that the actual equity investor is a resident alien, nonresident alien or resident foreign corporation, the income recipient will be considered a nonresident foreign corporation subject to final withholding tax of 30 percent.
The petitioners—which include the Philippine Stock Exchange, Bankers Association of the Philippines, Philippine Association of Securities and Dealers Inc., Fund Managers Association of the Philippines and Trust Officers Association of the Philippines—have argued that the scripless trading system in the country requires the presence of a securities intermediary, in this case the PCD nominee. They believe this will ensure not just the efficient transfer of shares but also preserve the integrity of the market, which otherwise may be “compromised” if investors are identified by unauthorized third parties.
The new BIR ruling, some petitioners believe, is just one creative way of soliciting information and circumventing the high court’s order.
The alphalist requirement, one capital market source said, was only a “fishing expedition where the fish must identify themselves so the BIR can pick and choose.” This, in turn, runs counter to the principle of “equal protection” and “partakes of self-incrimination even when there is no case yet.”
So, will the Supreme Court hold the BIR in contempt for issuing the circular? We hear that’s what the lawyers of the petitioners are fervently studying at this time.–Doris C. Dumlao
APC play
Shares of APC Group Inc.—long speculated to be the SM group’s future holding firm for energy-related assets—have been rising in the last two weeks in relatively bigger volume ahead of the company’s annual stockholders meeting this Monday as stock pundits bet that the long-awaited backdoor-listing may finally happen soon.
Asked if there’s something indeed brewing in APC, company chair Willy Ocier—who is in Europe traveling with the business delegation of Presdent Aquino—yesterday said there was no development yet that he knew of.
To recall, Allfirst Equity Holdings Inc., a private investment firm related to the SM group, acquired a 60-percent stake in Philippine Geothermal Production Co. owned by American multinational energy firm Chevron in 2012. According to observers, this is one key asset the SM group will infuse into APC.
Another source said the market would just be anticipating APC’s prospects given what had happened to Sinophil Corp., which was transformed into the group’s gaming investment holding arm.
On the APC backdoor listing, the source said it might not be “wise to do one so soon after the Sinophil development.”–Doris C. Dumlao
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