The STAR learned that in a hush-hush deal that took only a few weeks to finalize, the consortium, which also includes one of the country’s biggest real estate companies the identity of which was not immediately known, has just signed a memorandum of agreement with MPC, the local flagship of Hong Kong-based First Pacific Co. Ltd. and owner of BLC, whereby the group will pay $105 million to MPC in exchange for 50.4 percent of BLC.
This new development will, in effect, partially scuttle the agreement entered into by First Pacific and the Gokongwei group for the purchase by the latter of part of FPC’s 24.4 percent stake in PLDT and 50.4 percent interest in BLC. "The June 4 MOA between First Pacific and the Gokongwei group will have to be redone in the light of this new development," a knowledgeable source said.
While the SM property group of business tycoon Henry Sy has earlier expressed interest in acquiring a majority stake in BLC, The STAR learned that SM is not included in the consortium.
Highly placed sources revealed that the amount will be used by MPC to pay off its $105 million (principal including interest) loan to First Pacific subsidiary Larouge BV extended in April 2001. The loan was secured by a 50.4 percent interest in BLC, which is considered MPC’s biggest asset and co-developer of the ambitious Fort Bonifacio development project, and was supposed to have been due last December.
In fact, the consortium is already set to conduct due diligence on of BLC, which will not be a problem because Pangilinan happens to be the chairman of Metro Pacific. While the due diligence is supposed to review all the financial, economic and technical aspects of BLC, a source said the purchase and assumption of the loan by the Cojuangco-Pangilinan-led group is already ‘ a done deal.’
It is expected that in the next two weeks, all the preparatory activities will be finished, including paying off Larouge, considering that Pangilinan can easily facilitate the whole transaction.
Sources also explained that no undue advantage will be given to Larouge to the prejudice of other creditors of Metro Pacific since the the latter’s debt restructuring process is already almost over. "A bulk of the deals with the creditors have already been made and there has already been a big reduction of P7 billion out of the P18 billion loan obligations of MPC," an official source told The STAR.
Of the P11 billion in loans of MPC that are not yet covered by agreements with the creditors, P5 billion is owned to Larouge and P6 billion to other borrowers, who are not expected to oppose the payment of the Larouge loan since this would free up MPC’s biggest asset which is BLC.
By deciding to take on BLC instead of offering to buy the more expensive ($925 million) and legally complicated PLDT, the Cojuangco-Pangilinan group may have succeeded in the meantime in scuttling the deal between First Pacific and the Gokongwei group at a much affordable price of $105 million.
The $925 million price tag for PLDT involves the Gokongwei group paying First Pacific over a three-year period the amount of $616.6 million for a two-thirds participation in a joint venture arrangement that will assume First Pacific’s stake in PLDT and BLC. The balance of $305 million will represent First Pacific’s one-third interest in the joint venture.
Buying out First Pacific’s share in PLDT is not only expensive but also highly problematic. Before Cojuangco and Pangilinan can present a counter-offer to that of the Gokongwei group, they first have to convince NTT, which owns 15 percent of PLDT and has a shareholders’ agreement with First Pacific, to exercise its right of first refusal over FPC’s interest in PLDT and second, to convince NTT to assign it their group.
Up to now, First Pacific has not given NTT formal notice about its deal with the Gokongwei group. Supposedly, from the time the notice is served, NTT has 20 days to exercise or waive its right. According to First Pacific sources, no notice will be issued to NTT since discussions with the Japanese telco group "have already reached another level.’
And according to top NTT executives, they have not reached the point where they have to decide athough they still are reserving the right.
Both Cojuangco, who is chairman of PLDT, and Pangilinan, who also happens to be the chief executive of Metro Pacific and the executive chairman of First Pacific, have opposed the deal with the Gokongwei group from the beginning and have employed every means available in the book, the latest of which is a PLDT suit against First Pacific in a US district court, to stop it from being completed.
Since the MOA was signed last June 4, First Pacific has been trying to meet all the conditionalities contained in the agreement for the transaction to be completed, including facilitating the conduct of a due diligence investigation by the Gokongwei group, trying to convince NTT Communications Inc. of Japan not to exercise its right of first refusal over First Pacific’s share in PLDT, and getting all the necessary consents.
The PLDT board earlier issued a resolution saying it is holding in abeyance and deferring any action that may be required of the directors or the company in connection with the implementation of the transaction, including the conduct by the Gokongwei group of a due diligence investigation on PLDT and BLC.
The board has also contracted a battery of Philippines and US-based lawyers to map out the offensive against First Pacific and the Gokongwei group.