Battle of Taipans seen in tug-o-war for Naia-3
TAIPANIC BATTLE: The titanic tug-o-war for control of Terminal 3 of the Ninoy Aquino International Airport (Naia-3) is fast shaping up into a Battle of Taipans. The ground at the tarmac is already shaking.
The early bid by Dr. Emilio Yap, owner of the Manila Bulletin and the Manila Hotel, to control Naia-3, has been challenged by Dr. Lucio Tan, owner of Philippine Airlines and a host of other enterprises.
Using his Manila Hotel as bidder, Yap threw in $200 million to buy the 40-percent share of German airport operator Fraport AG in the Philippine International Air Terminals Co. (Piatco) that is asserting its controversial contract to build and manage Naia-3.
Yap’s line of attack seems to be: Whoever controls Piatco will control Naia-3 — that is, if its contract, nullified in 2003 by the Supreme Court, is revived and validated in the unlikely event that the SC decision voiding it is reversed.
Assuming Piatco’s contract to run Naia-3 is reinstated, which is the best route to gaining control of the firm run by the Cheng family (the biggest name in the local airport cargo handling business)?
* * *
TAN’S COUNTER: The signatures on the Manila Hotel-Fraport buy-out contract had barely dried when Tan raised the ante and offered directly to the government $300 million to buy control of Naia-3.
The $300-million offer of Tan, made to the government and not to Piatco or Fraport, is 50-percent higher than the $200 million paid by Yap to Fraport to buy out its full share in Piatco.
But as everybody in this small town knows, money is not the only consideration in closing business deals of this magnitude. One big factor, to give an example, is the Big Hand of Malacanang.
Who between Yap and Tan will eventually control the premier international airport now sitting in the dark across the lone runway of the old airport in Pasay City?
Who will be blessed by the Palace? I see looming a long-drawn taipanic battle.
* * *
WHO TO TALK TO: From one legal viewpoint, Piatco no longer has a valid contract to operate Naia-3. Shot through with alleged deficiencies and violations of law, its contract has been voided by no less than the high court.
The deal is, in theory, no longer enforceable. So why did Yap still buy into Piatco by buying out Fraport? Maybe Yap, and possibly someone in the Palace, know something the rest of us do not know.
The government is now supposed to be in control of the premises, of both the land and the structure built by Piatco on it for something like $500+ million.
In fact, the government is in the final stages of expropriating the property, taking possession of it after due process and just compensation.
Is Tan correct in talking to the government instead of to Fraport or to the Chengs of Piatco? At this point, nobody — except, again, that someone in Malacanang — knows.
* * *
TAN’S HEADACHE: Let us peek into the background of Tan to be able to divine what forces move him in trying to get Naia-3.
Tan owns Philippine Airlines, which he revived at great personal cost to him after that crushing fight with the pilots’ union some years back. The flag carrier now has exclusive use of the Centennial Terminal (sometimes called Naia-2, if you may, with Naia-1 being the original terminal where Ninoy Aquino was executed in 1983).
Yap or any rival taipan controlling Naia-3 can make life miserable for Tan. For instance, the airline could be forced to divide its domestic and international operations between Naia-2 and Naia-3. This costly spreading out of resources, personnel and operations will kill PAL.
If the government sides with a new Naia-3 operator against Tan, it could add to his misery by withdrawing or making unpredictable the customs and immigration services in the terminal used by PAL’s international flights.
Also, if Yap’s control of Piatco is perfected, the giant cargo handling firm could dilute to anemic levels Tan’s airport and airlines-related businesses.
I dare say that if such a dire scenario comes to pass, Tan is likely to just close down PAL rather than see himself go down to his knees before Yap.
* * *
AEDC VEHICLE: Aside from being PAL owner and sole user of the Centennial Terminal, Tan is also the surviving stockholder of the Asia’s Emerging Dragon Corp.
The AEDC, composed of the really big taipans of Philippine business (who strangely did not include Yap), was formed with the encouragement of the government purposely to build a modern international terminal that could compare with the best in the region.
When the AEDC, the original Naia-3 contractor, submitted its ambitious plan for the terminal, the hitherto unheard-of Piatco emerged from nowhere and made a better offer. The AEDC failed to make a counter-offer, resulting in the contract being awarded to Piatco.
With that setback, six of the seven taipans withdrew from AEDC, leaving Tan running AEDC by his lonesome.
Now using AEDC as the vehicle since it was the original contract-holder for Naia-3, Tan submitted last Sept. 8 his $300-million offer to take over and operate Naia-3. He chose to deal directly with the government since the government has taken over Naia-3 after the voiding of the Piatco contract.
* * *
QUESTIONS: Despite the slew of press releases about Manila Hotel’s takeover of Piatco and ultimately the airport, the Fraport deal remains shrouded in mystery.
First, there are questions as to how Manila Hotel, with its authorized and paid-up capital of only P1 billion ($18 million), can buy Fraport’s $200-million stake in Piatco. Some observers say this is analogous to a snake swallowing an elephant.
Second, since the Government Service Insurance System owns roughly 15 percent of Manila Hotel (per its 2004 General Information Sheet), the latter’s purchase of a troubled firm like Piatco automatically makes the government pension fund share in the risk.
Not only was Piatco’s contract voided and the government’s hold on the property tightened with expropriation proceedings. Some Piatco officers and government officials are also facing graft and plunder charges before the Ombudsman.
I have heard members of the Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE) expressing grave concern over the Manila Hotel-Fraport-Piatco deal. They said they would oppose any plan by the pension fund to extend loans or to guarantee debts to be incurred by Manila Hotel as a result of its purchase of Fraport’s shares.
* * *
PALACE ASSURANCE: On whose side is Malacanang in this looming battle royal? It cannot be that the Palace is ignorant of what is going on or will remain indifferent considering the big stakes involved.
If it is any consolation, Executive Secretary Eduardo Ermita ended weeks of speculation when he declared days ago that government is not entertaining any bid for Naia-3 until the administration has resolved all the legal questions.
He said that government’s priority is to finish the expropriation proceedings and for airport Japanese contractor Takenaka to make the airport ready for use as scheduled. Does this mean that the competing bids of AEDC and Manila Hotel-Piatco would have to wait?
It is noteworthy that Ermita also said that government would pursue the graft and plunder cases against the public officials and private individuals who were involved in the airport project.
But then there is sometimes a gap between what government says and what it does.
* * *
YOUNG ARTISTS: For more than 20 years now, the Metrobank Foundation Inc. has been awarding promising young artists who have excelled in painting through the Young Painters Annual (YPA). The competition has recognized more than 500 young Filipino painters, a number of whom have attained international stature.
Metrobank Executive Vice President and Executive Director Aniceto M. Sobrepena reiterated yesterday the bank’s commitment to uplifting young artists and establishing partnerships with key cultural institutions such as the Cultural Center, the National Commission for Culture and the Arts, and the Metropolitan Museum of Manila.
He announced this year’s awarding ceremony and exhibit opening on Sept. 16 at the Le Pavillon, Metrobank Ave., Roxas Blvd. cor. EDSA Ext. Pasay City. Registration starts at 4:30 p.m., the ceremony at 5:30 p.m.