Biz Buzz: Fowl news
When it comes to the local food business, this restaurant chain is one of the most storied and successful. In fact, it has been so successful over the last few decades that it sealed a major acquisition deal a few months ago, buying another restaurant chain in an effort to expand its market footprint.
Alas, all is not well with the finances of the group, however.
Word on the street is that this group pawned a number of real estate assets of the owner—a wealthy family—in order to fund the acquisition made earlier this year. These assets included a property in the swanky Ayala Alabang Village, we’re told, and was used as collateral for a bank loan that was part of the pooled funds for the restaurant chain’s purchase.
But now, it seems that the company is starting to experience difficulties in servicing this loan. Uh-oh. We heard that the group has actually had to hire the services of an investment banking firm, which counts among its skills the delicate task of debt restructuring.
More importantly, however, the company’s tight financial situation seems to be preventing it from accessing the capital markets, making its planned fund-raising exercise somewhat doubtful.
One banker we spoke to said they smell something frying.–Daxim L. Lucas
‘Alphaland reborn’
Alphaland Corp. chair Roberto V. Ongpin can finally breathe a sigh of relief and look forward “to doing more productive things and moving forward as a private company” now that his group’s disengagement with British fund Ashmore has been executed, the businessman said in a recent letter to friends and members of Balesin and Makati City Club.
In his letter titled “Alphaland Reborn,” RVO explained the impact of the division of assets that amicably settled the dispute with Ashmore, whose new local partner is now the businessman’s nephew Eric Recto, who was very instrumental in finding a middle ground between the feuding parties. The net worth of Alphaland, he said, was still a substantial P37 billion after the transaction.
In line with the settlement, RVO said Alphaland had transferred the following assets, together with all attendant liabilities, to Bedfordbury Development Corp., the joint-venture company of Recto and Ashmore: the Alphaland Tower on Ayala Avenue, the Alphaland Marina Club project, a 50-percent ownership in the Alphaland Bay City joint venture and a 60-percent ownership in the joint venture known as Boracay Gateway. In return, Alphaland got back all of Ashmore’s shares in the corporation plus P2.5 billion in cash. Alphaland, for its part, retains ownership of the Balesin Island Club, the Alphaland Makati Place complex, including The City Club, the Alphaland Southgate Tower and mall and the Baguio Mountain Lodges project.
“The financial implication of this transaction is as follows: Alphaland’s total assets have decreased to P48 billion but its liabilities have likewise decreased to only P11 billion. With this robust balance sheet after its disengagement with Ashmore, Alphaland will continue to be one of the most substantial property companies with a solid financial base. Notably, Alphaland’s debt-equity ratio is now a very comfortable 24-percent debt to 76-percent equity, clearly a position which results in Alphaland having a huge unutilized borrowing capacity, in addition to a ‘war chest’ of P2.5 billion in cash,” RVO said in the letter, a copy of which was obtained by Biz Buzz.–Doris C. Dumlao
Win-win?
It does not have to be a total defeat for the loser between what now appears to be two frontrunners for the Cavite Laguna Expressway deal, assuming that—as the Ayala-Aboitiz team suggests—President Aquino just picks a winner instead to avoid a hard decision of ordering a controversial rebidding exercise.
Several third-party analysts and investors said it might be good for the two opposing groups, the Ayala Corp. and Aboitiz Land-backed Team Orion and San Miguel Corp.’s Optimal Infrastructure Development Inc., to come up with some sort of arrangement to move the stalled deal forward.
By arrangement, we mean a deal that should at least provide some benefit to both groups apart from the obvious goal, which is to give Filipinos in that area a much needed piece of infrastructure.
Public Works Secretary Rogelio Singson was not keen on the idea, but SMC president Ramon Ang said he was open.
Ang told Biz Buzz a deal with Ayala-Aboitiz was “OK if they want.” Our sources in the other camp, who are typically more reserved in dispensing information, would only say no moves have been made in this regard.
Safe answers, to be sure, but also appropriate.
After all, any group that would initiate such talks may need to come from a position of weakness—and so far, both groups are asserting that they legally deserve to win the P35.4-billion public private partnership (PPP) deal.
The tone might change once President Aquino makes a final decision, and we hope it’s the one that would cause the least collateral damage.–Miguel R. Camus
More rice buckets
Filipino-Chinese businessman Henry Lim Bon Liong (CEO of Sterling Paper Group of Companies and hybrid rice producer SL Agritech Corp.)—the guy who threw the rice bucket challenge to businessman Manuel V. Pangilinan—is so happy at how this initiative to help feed the poor had snowballed in the country.
Lim noted that the initiative had gained a lot of following, with more than 30,000 buckets pledged and given so far. “The number is still growing,” he said.
After giving out 5,000 rice buckets to 5,000 poor families, Lim said he was also set to donate 5,000 meals of nutritious brown rice champorado to 5,000 poor and undernourished children to start the ball rolling.–Doris C. Dumlao
Payback
It wasn’t too long ago when Globe Telecom Inc. stood at the forefront of efforts to blunt the effects of a merger between industry giant PLDT and No. 3 player Digital Telecommunications Inc., which owns the Sun Cellular brand. That effort proved to be successful after the Aquino administration ordered that the merged PLDT-Sun entity be stripped of the precious 3G frequency that the Pangilinan-led firm was after.
Now, it seems that it’s PLDT’s turn to try and derail a Globe deal with Bayan Telecommunications.
We hear that Bayan and Globe were on the cusp of getting approval from the National Telecommunications Commission (NTC) for the corporate rehabilitation of Bayan—a plan that would create a healthier and more competitive telecom industry in the Philippines.
But PLDT ran to the courts earlier this month and obtained a two-month injunction from the Court of Appeals. The injunction directed the NTC to refrain from further proceeding with hearings on Bayan and Globe’s joint petition.
Biz Buzz sources say that Globe’s leadership is hopping mad, especially since the injunction served no one’s interests except PLDT’s (according to the pro-Globe grapevine, of course).
Interestingly, PLDT’s move effectively pits one court (the Court of Appeals) against another (the Pasig Regional Trial Court), as Globe had earlier obtained approval from the Pasig RTC for its proposed rehabilitation plan for Bayan.
This rehab program called for Globe to convert 69 percent of Bayan’s debt that it holds into 54 percent of the company’s stock, effectively taking control of the firm from the Lopez family.
Of course, PLDT’s move effectively preserves the duopoly status in the local telecommunications industry (since Globe was planning to operate Bayan as a separate entity, at least for now).
Meanwhile, Bayan employees are left hanging and thousands of customers are denied the opportunities for improved capabilities, products and services while the two giants slug it out.–Daxim L. Lucas
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