The state-owned Home Guaranty Corp. has sued for the recovery of a substantial equity stake in Harbour Centre Port Terminal Inc., saying a Romero family-owned firm had illegally acquired the state’s shares and violated the terms of a 1990s-era partnership.
In a complaint filed before the Makati regional trial court, the government housing agency asked for the return of a 28-percent stake in the port operator that was turned over to it in 2003 by the previous management of HGC.
The case stemmed from a partnership between the government and R-II Builders Inc. of businessman Reghis Romero II in 1993 for the Smokey Mountain housing project wherein the government got a 60-percent stake in a joint-venture asset pool by contributing land to Harbour Centre.
HGC’s 10-hectare property infusion entitled it to P607 million worth of common shares and P1.143 billion in preferred shares in the resulting asset pool.
The agency claimed that R-II billed it in 2002 for work done on the project and acquired 285 million shares, which was then surrendered by HGC’s previous management to the disadvantage of the government.
“These shares were seized [by R-II Builders Inc.] in 2003,” Housing and Urban Development Coordinating Council Assistant Secretary Dan Subido said in an interview with the Inquirer. “The transaction had no HGC board approval. It was approved only by the HGC president then.”
The official said that, under the agreement between HGC and the Romero firm, the government’s contribution to the deal would only be the property and nothing else.
“The funder should solely be R-II,” Subido said. “But R-II didn’t shell out money. In fact, they even billed the asset pool.”
Despite representations made by the state housing agency, the government never benefited from the deal and did not receive any dividend from the business now controlled by the Romero family.
“Only the Romero family is making money,” he said.
HGC’s complaint before the Makati RTC for the “nullification of conveyance” of 286 million shares of Harbour Centre was filed last September 13.
In the filing, HGC alleged that R-II—which has acquired control of the affairs of HCPTI as a result of the transfer—“has, in bad faith, committed … acts of mismanagement and disloyalty such that the shares in Harbour Centre are in danger of losing their value, the underlying assets being removed, and/or the ability of Harbour Centre to continue as an ongoing business concern being materially injured.”
The HUDCC official lamented that Harbour Centre was even included as one of the underlying assets of the Romero family’s Global Port 900 Inc., which is listed on the Philippine Stock Exchange, and has indicated plans to do a follow-on share offering to raise at least $200 million.
“We want to recover the stake of the government because we were disadvantaged in this deal,” he said, adding that a favorable court decision would result in the government gaining control of Harbour Centre through a restored 60-percent stake in the firm.