At the same time government also retains the "call" option to buy back the same shares two years from now at P60 per share plus a 13-percent carrying cost if the bank is successfully turned around and becomes viable.
If Tan exercises the "put" option, the P600-million downpayment he earlier made to the government would be computed as part of the selling price.
However, if government is the one that exercises the "call" option, Tan’s P600-million downpayment would be forfeited. Actually, the P600 million is already as good as forfeited because government is not returning the money to Tan after he decided to back out of an earlier agreement to buy the government’s shares in PNB.
Tan was the sole bidder for the government’s PNB shares last April. He offered P100 per share on an installment payment basis.
However, Tan eventually decided to back out of the purchase and, as a compromise, government has required Tan to agree to the ‘put and call’ options.
Meanwhile, the Committee on Privatization (COP) is asking the group of Jose ch. Alvarez, who offered a bid of P2.5 billion for the Philippine Phosphate and Fertilizer Corp. (Philphos) to add another P800 million to its original bid to meet the government requirement that government assets should not be sold for less than 80 percent of its indicative value.
The COP had earlier set an indicative price of P4.2 billion for Philphos, but the Alvarez Group submitted a bid of just P2.5 billion.
Based on the requirement of not less than 80 percent of the assets indicative prices, the minimum acceptable bid should have been at least P3.3 billion.
Government is thus asking the group to put in an additional P800 million with a sweetener that the balance of P800 million could be payable in installment over a period of one year or it could be a bullet payment after a one-year grace period.
The Republic of Nauru, which was the government’s partner in Philphos, has a right to match the bid of the Alvarez group.
However, according to Finance Undersecretary Joel Bañares, the Republic of Nauru has indicated no interest to match their offer. Neither is it against the government’s privatization effort.
The privatization of PNB and Philippine and a few other government assets is supposed to help finance this year’s budget deficit.