Settlement of Ortigas row nears

OCLP’s crown jewel, the 16-hectare Greenhills shopping complex in San Juan.The battle for control of the vast Ortigas landbank in the metropolis is seen taking a new twist as a deadline lapses this week for the Ayala-backed majority group to match arch-rival SM group’s bid for a significant minority stake of at least 40 percent.

The battle for control of the vast Ortigas landbank in the metropolis is seen taking a new twist as a deadline lapses this week for the Ayala-backed majority group to match arch-rival SM group’s bid for a significant minority stake of at least 40 percent.

Several Inquirer sources familiar with the proxy war between two of the country’s leading property developers said a faction led by Fernando Ortigas had accepted a formal offer from the SM group to acquire his group’s stake in the holding company OCLP Holdings Inc., the parent company of Ortigas & Co.

But to legally consummate this deal with SM, a 30-day notice was sent to the group allied with the Ayalas led by Rafael Ortigas since under existing shareholder agreements, this side of the family had the right of first refusal on any stake to be unloaded.

The deadline to raise the money to buy out Fernando Ortigas’ group will lapse on Nov. 8, giving the Ayala-backed side of the family the first crack at consolidating interest in OCLP Holdings, several sources said. One source familiar with the two-year proxy war said: “He (Fernando) wants out. He doesn’t want to work with them in the boardroom anymore.”

The catch is that the premium offered by the SM group for the significant minority stake is described to be “too high”—enough to make the Ayala group blink, other sources said. One source estimated that the SM group was willing to pay P48 billion to officially take control of the stake held by the group Fernando Ortigas, estimated to have voting rights in OCLP of between 40 and 47 percent. This suggests that the enterprise valuation for 100 percent of OCLP Holdings was set at nearly a fifth of the market capitalization of either Ayala Land Inc. or SM Prime Holdings.

ALI did not seem to be mobilizing new funds to match SM’s offer to the faction of Fernando Ortigas, one source pointed out. However, another source in the property industry hinted that it was too soon to count the Ayalas out, noting that “there’s another thing happening on the Ayala side too.”

Asked about the forthcoming deadline to exercise the right of first refusal, ALI president Bernard Vincent Dy said in a text message to the Inquirer: “The Rafael Ortigas group is looking into it.”

Other property market sources said one possibility would for the Ayala-backed side of the Ortigas family to bring in another strategic partner to take up the stake on the block instead of resorting to additional borrowings. Taking up this right of first refusal is thus seen as a potential resolution to the tug-of-war as it can potentially allow a consolidation of control in OCLP within the Ayala-Rafael Ortigas alliance.

But in case the Ayala-allied group is unable to exercise the right of first refusal, the consummation of the sale of shares by Fernando Ortigas’ group to SM meant that the two rival groups will have to work together in the same boardroom in OCLP.

Apart from the two-year-old Ortigas tug-of-war, the Ayala and SM groups have clashed in a number of other big deals in the last few years, among them the proposed Manila Bay reclamation, the common station at the intersection of the metropolis’ elevated railways, the redevelopment of Negros Occidental’s provincial capitol and, indirectly, the establishment of SM Aura mall at the fringe of the former Fort Bonifacio military camp in Taguig.

For its part, the SM group has been bidding for a controlling stake in the Ortigases’ holding company in the last four years and at one point got close to doing so with a deal to acquire the 34-percent stake then to be unloaded by British bank HSBC along with the support of Fernando Ortigas’ group. Ortigas family members, however, exercised their right of first refusal on HSBC’s stake in 2012, consolidating control of the holding firm within the family.

The Ortigas family has since then split into two factions—one that favored taking in the Ayalas as a strategic partner and the other allied with SM. It was earlier reported that the Ayala-backed alliance edged out the SM group by winning the “swing vote” from the Archdiocese of Manila, which holds a 9-percent stake in OCLP Holdings.

The two property giants are drawn to OCLP given the Ortigases’ rich landbank in the metropolis amid a property boom in the last few years. OCLP’s crown jewel is the 16-hectare Greenhills shopping complex in San Juan. Other projects include the mixed-use Capitol Commons and the Tiendesitas commercial hub in Pasig. Its current landbank is estimated at around 50 hectares, based on estimates by external property experts. OCLP, however, can add another 40 hectares of prime land to its landbank, including portions of Camp Crame (10 hectares) and Camp Aguinaldo (30 hectares), which were donated to the government years ago but which it had the right to buy back in the future.

The old holding company Ortigas & Co. Ltd. was previously converted from a limited partnership into a corporate entity, a restructuring that allows the entry of a new investor, a stock debut or both.