Saving Nenaco

Out of curiosity, I asked Manny Pangilinan, managing director of Hong Kong-based First Pacific Co., whether it is worth saving Negros Navigation, which has been dragging down profits of parent Metro Pacific Corp. MVP answered with a resounding yes.

The question is but logical. First Pacific recently sold five percent of its shareholdings in Metro Pacific while the latter also sold some of a 10.33 percent stake in profitable property development subsidiary Landco, both moves aimed at largely raising funds to bail-out Nenaco which badly needs new funds to jumpstart its recently approved rehabilitation plan.

According to him, out of the proceeds of First Pacific’s sale of part of its holdings in Metro Pacific, Nenaco will be getting a P250 loan from Metro in two tranches (the first P123 million was already released)to be used to repair the ships and settle some of its tax liabilities. Nenaco earlier secured court approval to restructure P2.4 billion worth of debts over a 10-year period.

MVP just assumed chairmanship of problem-plagued Nenaco after Joey Lim resigned (or was asked to give way by his boss) and the former, who is also chairman of the PLDT group, says the move is a clear indication of the importance that First Pacific and Metro Pacific are now giving to the shipping company which for many years, he reiterates, they have neglected.

The neglect was understandable. The acquisition by First Pacific of Nenaco despite the latter’s humongous problems and lack of a viable business strategy was a favor asked for by the powers-that-be from MVP’s group. It was a bad proposition but they couldn’t say no. MVP once referred to Nenaco as an "unwanted child."

But clearly, Nenaco stuck out like a sore thumb amidst the accomplishments made by MVP in turning around PLDT and making it the country’s most profitable company. Something had to be done about Nenaco. Sources say there were recent attempts to sell the shipping company that used to be owned by the family of former Negros Occidental Gov. Bitay Lacson but there were no takers.

The strategy now, whether they admit it or not, is to turnaround Nenaco and sell it at a profit. In the meantime, a profitable Nenaco would also mean an improved bottomline for parent Metro Pacific, which during the first half of the year posted a loss of P5.9 million largely due to Nenaco‘s losses.

Bus operators seek help

The City and Provincial Bus Alliance of the Philippines (ALBAP) recently sent a letter to President Arroyo asking for some form of relief, amidst the spiraling cost of fuel which accounts for as much as 40 percent of operating cost.

Specifically, the group is asking that the third member of the LTFRB be appointed to avoid delays in the signing of important applications. Right now, there is only the chairman and one board member and approval for various applications require two signatures from the three-member board.

ALBAP is likewise seeking to update and complete the route rationalization plan of the DOTC/LTFRB so that government and bus operators can fully cooperate to service underserved routes and streamline operations in crowded and saturated routes. In the meantime, they are asking that LTFRB implement the route flexibility scheme, under which bus operators can shift their buses from saturated routes to underserved ones. Sounds reasonable.

Other ways in which government can assist bus operators is via the establishment of a credit window with a state-owned bank from which operators can borrow cheap loans for their fuel purchases, a price support mechanism for diesel until the crisis is over, exemption of bus operators from the planned increase in vehicle registration and other fees, implementation of an incentive scheme for bus companies that are acquiring new buses and generally improving their services, among others, the group said.

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