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Goodbye, Ampersand!

05:15 AM October 01, 2018

Only three months after operating Ampersand Capital—a former subsidiary of beleaguered Philippine Commercial Capital Inc.—we heard that businessman Januario Jesus “JJ” Gregorio Atencio III decided to shut down the investment house due to unexpectedly high operating costs.

To recall, Atencio acquired 100 percent of Ampersand for P305 million earlier this year. While Atencio was initially gung-ho on entering this new financial service space, we heard that this was only because he had to make the most out of the situation. He never really intended to run any investment house, but Ampersand fell into his lap as part of the consideration for an asset exchange bundle.

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However, as soon as he took over Ampersand, which he originally wanted to position differently by specializing in serving small and medium enterprises (SMEs), we heard that he was overwhelmed by the overhead cost. It was “too big to sustain one’s commitment to SMEs,” said one source who’s privy to the deal. Apparently, there were things that had not been disclosed to Atencio prior to his takeover—such as the P20 million in annual rental cost for a prime office space at Zuellig building and another P50 million in annual payroll expenses.

To preserve whatever assets that remain, Atencio decided to close this shop. So what’s still there in Ampersand? Apart from the investment house license, which Atencio can reactivate or sell in the future, there are the corporate IOUs. There’s a P200-million promissory note by biotech firm Philab Holdings Corp. and another P100-million IOU issued by AudioWav Media Inc., which had been planning a stock debut in the last two years.

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With a P200-million exposure to Philab, this makes the former CEO of mass housing developer 8990 Holdings the second-biggest creditor next to private equity firm Altus Capital (which extended P400 million in financing to Philab last year).

We heard that Atencio is interested in helping to revitalize Philab, but the question is whether he will be in sync with the long-term goals of the other key creditor Altus Capital. By nature, a private equity firm will want to exit after a specific timeframe.

Also, Philab’s last CEO, former Pag-IBIG chief Darlene Berberabe, quit after only a few months in office. —DORIS DUMLAO-ABADILLA

Bad POGO apples

When legitimate business operations prove to be lucrative, one can always expect some unscrupulous elements to try to grab a piece of the action through illegitimate means.

This is especially true nowadays in the booming online gaming industry where illegal operators have surreptitiously set up makeshift operations around the metropolis, eager to share in the action of the legitimate ones operating under the Philippine Online Gaming Operation (POGO) scheme of gaming regulators.

Biz Buzz learned that, yet again, authorities have raided another home in the exclusive Ayala Alabang Village just last week. A total of 14 Chinese nationals were detained by operatives of the Bureau of Immigration during the operation. Raided was a house near St. James the Great Parish Church inside the village and the suspects were caught setting up laptops and other electronic equipment in the third floor of the house they were renting.

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All were charged with cybercrime violations, we’re told.

One wonders why Ayala Alabang is a favorite of these illegal Chinese operations. Well, we’re told the gated community offers some degree of protection from the prying eyes of the public. Plus, there are many senior homeowners (some of whom are retired and in need of sources of income) who are willing to rent their houses to foreign lessees, especially these Chinese who are willing to pay a premium. In cash. No questions asked.

The downside is that these illegal operations are giving the legal ones a bad name. While POGO operations licensed by Philippine Amusement and Gaming Corp. spend substantial sums of money to protect the welfare of their Filipino and Chinese employees, the illegal ones are less scrupulous, housing many of their Chinese workers in cramped and dirty dormitories.

Hopefully, Pagcor can crack down on these illegal operations before they adversely affect perception on the legal businesses, which serve only foreign online gamers and have standards for ensuring the wellbeing of their employees.

At stake is a nascent industry which is estimated to provides the government at least P6 billion in fees for this year alone. —DAXIM L. LUCAS

Coal-fired power plant’s PSA coming?

Proponents and critics of the planned high-tech, $3-billion coal-fired power plant of Atimonan One Energy Inc. (A1E) in Quezon province are apparently both on edge with respect to regulatory approval on the project’s power supply agreement (PSA).

A1E, a subsidiary of distribution giant Manila Electric Co., laments that its proposed PSA has been languishing at the Energy Regulatory Commission for more than two years.

The application was filed on April 29, 2016. It did not help that the ERC was wracked by allegations of corruption and subsequently disabled to make decisions with the suspension from office of its commissioners. It also does not help that critics have condemned the PSA as an instance of “incestuous self-dealing,” considering that contract was between a subsidiary and its parent.

A1E further laments that the delay in an ERC-approved PSA “is adversely affecting the project economics … including exposure to higher fuel prices, interest rates and a weaker peso against the US dollar.”

On the other, critics are apprehensive about alleged maneuvering at the ERC for the purpose of greenlighting the A1E PSA, which would mean that power plant may finally be built.

They believe this is about to happen after the Department of Energy endorsed the Atimonan project as one of national significance. Under Executive Order No. 30, such status means that processing of requirements for the project should not take more than 30 days.

A1E officials downplay this status, saying it did not affect the project, considering that all permits for the Atimonan plant have been secured and the one thing that is lacking is a regulator-approved PSA. The project is “shovel-ready,” they like to say—all systems go, save for the PSA.

Critics feel betrayed by what appears to them as Energy Secretary Alfonso Cusi’s reversal of position with respect to Atimonan. Cusi had said that the PSA should follow the competitive selection process or CSP, subjecting a contract to competing offers, a scheme that took effect one business day after A1E filed its contract for ERC approval—hence, the accusations of a “midnight deal.” (But critics also shoot this down, saying that A1E’s PSA was filed past the 5 p.m. deadline on April 29, 2016.)

Further, critics allege that the recent appointment of two temporary ERC commissioners —to replace two who retired last July and to augment two who are returning from suspension—meant the looming approval of A1E’s PSA.

In any case, everyone is in their respective positions for the same reason as the project’s critics are in theirs—for the benefit of consumers.

“[The delay at the ERC] also puts at risk the electricity price to consumers and the needed security of power supply for the Meralco franchise area and the Luzon grid,” the Meralco group says.

“We are still pushing for the Atimonan PSA to undergo the CSP, to ensure that we come up with the lowest price for the consumers,” energy officials say.

In all these, there are conflicting and competing facts, maybe even fake ones. But one thing is sure, there is no monopoly of concern for the “welfare of consumers.” —RONNEL DOMINGO

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