BIZ BUZZ: AAA (Asian Aerospace arrears)
Clients heading last week to the Clark International Airport hangar of Asian Aerospace Corp. (AA), a 25-year-old business known for its AirTaxi.PH charter services, were in for a shock.
Plastered on the steel fence at the entrance was a sign from Clark Airport’s private operator, the Gokongwei and Gotinanun-led Lipad Corp., announcing the lease agreement with AA was terminated.
The site itself was padlocked, with Lipad declaring it had taken possession of the hangars and the rest of the nearly half-hectare property beside the Clark Airport Terminal 1 as of Dec. 6 this year.
Lipad would not kick out a tenant, especially a well-established one, so capriciously—but the reason was soon revealed: AA owes Lipad a whopping $2.9 million in unpaid lease rentals over three years. The loss of the Clark Airport facility dealt a painful blow to owner Peter Rodriguez, a businessman who grew AirTaxi.PH from two helicopters in 1996 to 27 aircraft, including a fleet of business jets.
Rodriguez has since lawyered up, hiring the respected Divina Law to settle the dispute. In a letter to Biz Buzz, Divina called AA’s lease rates “unconscionable and inequitable” given these were 800-percent higher than Manila and 2,000-percent higher than some of its rival foreign operators in Clark.
Thus, AA was made “a second class citizen in its own country” and a victim of “an invidious form of discrimination and violates Asian Aerospace’s rights under the law.”
Divina also pointed out that AA invested billions of pesos to develop its aircraft-heavy maintenance facility, generating numerous jobs in Clark.
According to Divina, the dispute involved the reformation of contract (the legal remedy allowing a court to adjust the contract after it’s signed to clear supposed mistakes or misunderstandings) on new lease rates. The new contract involves a much larger sum of $6 per square meter. This was sealed between AA and Lipad in 2018 or a year before Lipad formally took over as operator of Clark Airport after winning a 25-year public-private partnership concession. Jaime Alberto Melo, Department of Transportation assistant secretary for airports and aviation, told Biz Buzz that AA was treated more than fair over several administrations.
In fact, like other new operators, he explained AA was accorded startup rates of $0.70 for hangars, $0.50 for improved areas and $0.15 for open spaces for 15 years under its previous contract with Clark International Airport Corp. (CIAC) from 2004 to 2018.
The startup lease rate is designed to be accommodating enough to help younger businesses earn back their investment until they are a much larger enterprise capable of paying the standard rates.
It was by no means a permanent arrangement and should not be compared to rates for land that had been developed, Melo explained.
In any case, AA still agreed to the new contract with Lipad in 2018.
Melo said CIAC, at the time, was even supportive since it would allow AA to continue doing business in Clark Airport given its status as a longtime tenant. As it turned out, the issue was far from resolved and AA refused to pay the new lease, resulting in the drastic action from Lipad. It’s wait and see now insofar as how the courts will resolve the dispute.
—Miguel R. Camus
Probing the sell-off
It’s not something that can be swept under the rug. The Philippine Stock Exchange (PSE) is now investigating the Medilines Distributors Inc. listing debacle that has unnerved a lot of investors in the capital market, thereby dashing hopes of ending the year on a high note. This debacle has already spooked Figaro Coffee Group, supposed to be the finale in the exciting 2021 initial public offering (IPO) lineup.
One theory was that a big number of shares had been ordered to be liquidated on listing day at whatever price upon market opening. Everything went downhill from there, bringing the share price down to the floor. It’s a good thing that the volatility band had earlier been adjusted to narrow the maximum price decline to 30 percent from the previous 50 percent.
Who was in a hurry to unload those shares? Was there any violation of trading rules or is it one of those irrational market movements?
Only the PSE, together with its market regulation arm, Capital Markets Integrity Corp., can shed light on the matter. “[We’re] doing [an] investigation,” a high-ranking PSE source told Biz Buzz.
Meanwhile, calls for a mandatory stabilization fund for future IPOs have not fallen on deaf ears. At a time when local equities are in a cutthroat competition with other global exchanges and asset classes (now that everything can be done online)—particularly cryptocurrencies, which more and more people now find more exciting—the PSE has to consider all options to keep and grow its flock. “We are looking into it,” the PSE source said.
—Doris Dumlao-Abadilla INQ
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