UNION  BANK  OUTBIDS  LUCIO  TAN  FOR  PNB  STAKE

MANILA, August 13, 2005
 (STAR) By Donnabelle L. Gatdula - The consortium of Union Bank of the Philippines (UBP) and Avenue Asia Group offered the highest bid yesterday at P43.77 per share for the 67-percent stake in the Philippine National Bank (PNB).

The only other bidder was the Lucio Tan Group (LTG) which submitted a lower bid of P43 per share. UBP/Avenue’s bid price is 77 centavos higher than the government’s floor price of P43 per share worth P11 billion.

However, by submitting its bid, the LTG will have the right to match the highest bid as stated in the joint sale agreement it entered into with the government in August 2002.

The government will issue a Notice to Match to the Tan group, who will then be given 15 days to exercise its right to match the higher offer.

As required under the bidding rules, the UBP-led consortium submitted its bid security worth P1.655 billion covering both the government and LTG shares. On the other hand, LTG submitted its bid security for P800 million for the government shares.

Based on the bid documents submitted, UBP will be the lead member of the consortium with 57-percent ownership interest while its partner, Avenue Asia Group, will own the remaining 10 percent of the 67-percent ownership interest offered for sale on a fully diluted basis.

Based on their bid price, the transaction will cost the UBP consortium P16.98 billion of which P1.98 billion will be the National Government’s share; P6.16 billion for the Philippine Deposit Insurance Corp. (PDIC); and P8.84 billion for the Tan group.

Edwin Villanueva, chairman of the bidding and negotiating committee constituted by the government and the LTG to conduct the public bidding of their joint 67-percent ownership interest in PNB, said the interest generated by local and foreign investors on the transaction was quite strong, with 10 bidders submitting pre-qualification documents and expressions of interest.

Jose Ngaw, an LTG official, said the group would match the offer of UBP consortium.

"Yes (we will match). But we need to receive the notification from the PDIC first," he said.

UBP is the 11th largest domestic bank in the Philippines in terms of assets. It has a network of 111 branches nationwide. The New York-based Avenue Asia Group, on the other hand, is an international group of funds specializing in distressed assets. Three of its funds, namely Avenue Asia Investments L.P., Avenue Asia International Ltd. and Avenue Asia Special Situations Fund III L.P. participated in the UBP consortium’s bid. The Avenue Asia Group has bought non-performing loans from various local banks.

The Tan group, which has a 45-percent ownership stake in PNB, also owns Allied Bank. PNB, under the stewardship of the professional team put together by the LTG and the government, has made a significant turn around in its financial performance.

PNB is the fifth largest domestic bank in the Philippines in terms of assets. It has a network of 324 branches and offices in the Philippines and a total of 97 branches, offices and subsidiaries abroad. It is the market leader in handling overseas Filipino workers’ (OFW) remittances.

Finance Secretary Margarito Teves described the PNB bidding as "a fruitful exercise". "It turned out well. We hope to see more successful exercises such as this as the government is expected to hold similar privatization efforts in the future."

For his part, PDIC president Ricardo Tan said they would repay the loans, which was used to finance the rehabilitation of PNB, to the Bangko Sentral ng Pilipinas (BSP) once they got the proceeds from the sale.

The bidding was the government's second attempt in five years to sell the bank, which became profitable in 2003 after sheddiing bad loans for companies such as Philippine Airlines and National Steel Corp.

"This might be the good time for the government to be able to get out of PNB given that it has turned around its finances,’’ said Jose Vistan, an analyst at AB Capital Securities.

Shares of PNB have more than doubled this year, compared with an 11.8 percent gain by the benchmark index. The bank is the best performer so far this year in the eight- member banking sub-index.

The sale is the biggest for the government since 1997, when it franchised the water utility in Metro Manila in a 25-year, $7-billion contract.

"The completion of the joint sale will be seen by domestic and international investors as a positive development for PNB and the banking industry as a whole,’’ Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco said.

In June 2000, the government scrapped an auction for a 30 percent stake in the bank because only one bidder made an offer.

Interest in PNB may stem partly from its handling of about a third of the money remitted home annually by OFWs said Alex Pomento, head of research at Macquarie Securities.

The central bank this month forecast growth in remittances may exceed its 10 percent estimate for the year, as Filipinos found higher-paying jobs abroad. Remittances rose a fifth to $4 billion in the first five months of 2005 from a year earlier.

The National Economic and Development Authority (NEDA) expects remittances to reach a record $12 billion this year, the agency’s director for planning Dennis Arroyo earlier said.

"Acquiring PNB would give you an instant presence in this lucrative market,’’ Pomento said.

Shopping mall magnate raises stake in food and beer conglomerate San Miguel 08/12 4:44:56 PM

MANILA (AFP) - Shopping mall magnate Henry Sy's investment vehicle has raised its stake in San Miguel to about 11 percent by buying an additional 4.6 percent of the Philippines-based regional brewer, the buyer said Friday.

SM Investments Corp said in a disclosure statement that it paid about nine billion pesos (161.7 million US dollars) for the additional shares in San Miguel, one of the country's largest companies.

The extra investment is "testament to its growing optimism on (San Miguel's) long-term potentials having built a solid domestic business base for its alcoholic and non-alcoholic beverages, food, and packaging products where it is the recognized market leader," SM Investments said.

It said San Miguel's acquisition this year of Australian dairy outfit National Foods Ltd, which was financed by debt, has "strong potential to contribute significantly to San Miguel's bottom line and cash flows."

This should also act as a "natural hedge against the volatility of (San Miguel's) domestic food business which is subject to the vagaries of the local market."

SM Investments, which listed on the Philippine Stock Exchange earlier this year, is controlled by Henry Sy of the SM chain of shopping malls.

He joins the Philippine government, San Miguel chairman Eduardo Cojuangco, and Japan's Kirin Brewery as San Miguel's principal shareholders.

On Thursday San Miguel reported that its first half net profit fell 3.7 percent from a year earlier to 3.85 billion pesos due to rising raw material and packaging costs as well as higher financing charges."

The 155-year-old company has been expanding into the Asia-Pacific region in recent years through acquisitions and setting up new plants.

Aside from beer, it is also engaged in, meat processing, soft drinks, juices, animal feed and packaging. It has breweries in China, Vietnam, Indonesia, Australia and Thailand and packaging plants in China, Vietnam and Malaysia.


Reported by: Sol Jose Vanzi

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