The loan arranger

Apparently still in hot pursuit of businessman Roberto V. Ongpin over his Philex deal with DBP, two powerful committees in the Senate are setting up a dragnet.

They are the committee on banks, financial institutions and currencies (headed by Sen. Serge Osmeña) and the blue ribbon committee (headed by Sen. Teofisto Guingona III).

Last week the good senators vowed to investigate other deals of the Development Bank of the Philippines. Thus, the “investigation” should only lead to the bank’s sale of its holdings in other companies. One of them is Meralco.

Meralco, Meralco, Meralco—this was the company that, during the height of the financial crisis in 2008, made headlines because its shares defied the prevailing downtrend in the stock market at that time.

With the price of Meralco shares then at P45 per, DBP and other GFIs were able to sell their Meralco holdings at P90 per, or just about double the market price.

We all know that the buyer was San Miguel, led by its vice chair Ramon S. Ang, which at that time was poised to take over control of the distribution company from the Lopez group, which in turned formed an alliance with the group of Manuel V. Pangilinan, a.k.a. MVP.

Naturally the resulting bidding war between MVP and RSA should only push up the Meralco share price to the stratosphere. The war was triggered by the GFIs’ sale of their block to San Miguel.

Today, anyway, it seems that our bright senators are saying in effect that DBP and the GFIs (particularly the GSIS) should have waited three years later to unload their Meralco holdings, because the price is now about P248 per.

As I said, with the market price at P45 per at that time, the GFIs already sold at 100 percent premium, precisely because the buyer—i.e., San Miguel—was willing to pay extra for the bulk purchase, a step closer towards its takeover plan.

In fact, even the Lopez group sold their 20 percent interest in Meralco—also at P90 per at that time. Not only that, the Meralco retirement fund sold at the same price. Both of them sold to the MVP group.

Remember that in 2008 it was a down market. The US financial crisis had just begun. Stock markets all over the world were collapsing. Yet the Lopez group and the GFIs got 100 percent premium in selling Meralco shares.

Enter Henry Sy Jr., one of the heirs of the SM group of companies, who offered to pay P300 per share for the remaining 6 percent Meralco holdings of the Lopez group.

At that price, it actually became the swing block. Whichever group acquired the 6 percent holdings—either that of MVP or RSA—it would, in effect, take controlling interest in Meralco.

The Lopez group of course decided to sell the 6 percent block, plus another 7 percent from the Meralco retirement fund, not to Henry Sy Jr. but to the MVP group.

Just between us girls, by one account of a stock market research team, the sale of their Meralco holdings already earned for the GFIs a total of P17 billion. Again, that was a cool P17 billion!

I mean, really, do we really need another investigation over a transaction that yielded some P17 billion in profit?

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Talk goes around in banking circles that the next round of Senate investigation over the DBP may feature some booby traps. Among them are loans written off by the DBP as part of the SPV law.

Remember that, the “special purpose vehicle” law, the one designed to rid our banks of some of their NPAs, or “non-performing assets?”

Well, sometime in 2006, the DBP wrote off almost P10 billion of its loans as part of its SPV program.

Written off at that time were some P1.67 billion in DBP loans to the Lopez group. The biggest write-off was the P710 million loan to Maynilad Water, which was obtained in 2000. After three years, or in 2003, Maynilad had stopped payment of interest on the DBP loan. Eventually, the MVP group also acquired Maynilad.

Other Lopez group companies that enjoyed the loan write-off bonanza in the DBP were Bayantel (loan of about P592 million), Central CATV (P207 million) and Benpres Holdings (P158 million).

The question, which may or may not come up in the forthcoming senate investigation, is this: Why were those accounts included in the SPV program? You know, things like, well, who arranged for the P1.67-billion write-off?

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If indeed our senators want to do something for the country, maybe they can take a look at the high power rates. One senator after all is chair of the Joint Congressional Power Commission.

According to the Philippine Exporters Confederation, or Philexport, exporting companies here are planning to move to China and Vietnam because of the high electricity rates.

The Philippines has been ranked as having the highest power rates (residential) in Asia and the fifth highest in the world.

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During the last long weekend, perhaps unknown to the top officers of the Philippine National Police, a group of policemen took over a mining property in Zambales known as Coto Mines.

From what I gathered, the policemen dismantled guard houses in the area that were occupied by personnel of the Consolidated Mining (CMI), owner of the mining rights in the area. The policemen then set up their own checkpoints.

Following the takeover by the police, some Chinese nationals (reportedly connected with Geo King Asia Mining Corp.) entered the Coto mine site, escorted by the same policemen.

In effect, it was forcible takeover of the mines by the Chinese company, aided even by the police.

A similar takeover was reported at the port that CMI used to ship out ores from the mine site. The operator of the port is State Investment Fund, which is under the authority of the Philippine Ports Authority. According to reports, the entry to the port has been blocked.

Word goes around that the takeover of the mine was the handiwork of politicians in the area. How could the police force be involved without some political backing, right?