Gov’t hopeful on P2-B privatization target

DESPITE the challenges faced by two big-ticket privatization activities in the pipeline, the Department of Finance remains optimistic that the government could dispose of land and bank assets to achieve the P2-billion target this year.

“We’re still hopeful. We have six months to go,” Finance Undersecretary Gil S. Beltran said in a text message last week. Beltran is the acting chair of the Cabinet-level, interagency Privatization Council.

Last week, the Presidential Commission on Good Government (PCGG) declared a failure of bidding for the P16.5-billion “Payanig sa Pasig” property in Ortigas Center, which is being hounded by legal issues arising from private claimants.

Early this month, the government temporarily suspended the planned sale of its controlling stake in United Coconut Planters Bank (UCPB) in compliance with a temporary restraining order from the Supreme Court on the implementation of two executive orders. The said orders would have set in motion the privatization and reconveyance to the government of about P74.3 billion in coconut levy funds, which were declared public funds by the high court earlier.

The Privatization and Management Office (PMO) had been in the process of disposing the government’s UCPB stake, originally targeted for conclusion this September.

For the UCPB stake, the PMO has adopted a privatization scheme that would require the winning bidder not only to acquire the government equity but also infuse fresh capital into the bank.

The transaction would require the recapitalization of UCPB by at least P15 billion through subscription to 37.2 billion primary common shares. It also calls for the outright purchase of at least 1.11 billion common shares, or 73.9 percent of the bank, held by the government.

The floor price was set at P1 a share, which meant the entire deal would have required a total investment of at least P16.1 billion.

Last month, the PMO received 12 letters of intent from local and foreign banks, and from private equity firms that were keen on buying UCPB, the country’s 12th biggest bank with about P260 billion in assets and more than 200 branches.

The latest Bureau of the Treasury data showed that privatization proceeds as of the end of April had amounted to P205 million, P167 million from the PCGG while P38 million came from the PMO.

In May, the PMO awarded the 25,044-square meter Repacom property in Bulacan to the highest bidder, who shelled out P15.7 million.

Chief Privatization Officer Toni Angeli V. Coo had told the Inquirer that the PMO was in talks with at least one firm interested to buy the 13,000-square meter, two contiguous lots of Luzon Aggregates Inc. in Parañaque City.

Since the second attempt to sell the Parañaque property in May was again declared a failure as no one submitted a bid, the PMO could entertain a negotiated sale based on the previously set floor price of P268 million, Coo had said.