Gokongweis to hold on to 12.75% stake in PLDT

MANILA, Philippines - The Gokongwei group plans to hold on to its newly acquired 12.75 percent interest in telecommunications leader Philippine Long Distance Telephone Co. (PLDT) on a long term basis.

JG Summit Holdings president Lance Y. Gokongwei told The STAR that their group has no immediate need for funds that will require them to sell part of their stake in PLDT. “PLDT is a good company. We plan to be there for the longer term,” he said.

Gokongwei revealed that Cebu Air’s orders for additional aircraft will be financed mainly through export credit agencies and internally generated funds.

While JG Summit has earlier indicated interest in participating in projects under the government’s private-public partnership program, particularly in power and airports, he said nothing definite has been decided.

Gokongwei revealed in an interview that they are interested in a number of airports whose operation and maintenance government may want to privatize in the future.

Asked as to whether Metro Pacific Investments Corp. (MPIC), chaired by Manuel V. Pangilinan who also heads the PLDT group, has invited JG Summit to be a partner in the former’s bid to construct and operate Terminal 2 of the Diosdado Macapagal International Airport in Clark, Pampanga, Gokongwei said that issue has not been brought up although JG Summit is open to partnering with MPIC.

JG Summit Olefins Corp. Is also constructing its P33-billion ($700-million) naphtha cracker plant in Sto. Tomas, Batangas. The plant, which will have its own power plant, is expected to be ready for commercial operations in 2014. It will have an annual capacity of 925,537 metric tons and will produce polymer-grade ethylene and propylene, pyrolysis gas and by products such as fuel gas, fuel oil, and acid gas.

Gokongwei told The STAR that they are exploring the possibility of putting up a larger power plant, maybe 250-megawatt LNG or coal, behind the 60-MW power plant to be used by the cracker facility.

“With a naphtha cracker facility as well as a polymer plant (both in Batangas), we can develop a good local plastics industry. Right now, in terms of per capita production of plastics, we are the lowest in Asia,” he said.

Naphtha, an oil derived from coal, is an ingredient in the production of polypropylene and polyethylene. The new cracker plant would finally complete a petrochemical plant that the conglomerate has been planning. JG Summit’s petrochemical activity includes the production of polypropylene (PP) used in making films, adhesive tapes, cigarette and candy wrappers, cosmetics, pharmaceutical and food packaging materials.

JG Summit’s petrochemical plant was put up in Barangay Simlong, Batangas City in 1998 and became the Philippines’ first integrated PP and PE complex. At present, existing polymer plants (PP and PE) are importing monomers, the raw materials needed for the petrochemical process. The naptha cracker plant aims to lessen dependence on imported ethylene and propylene feedstock.

In its comprehensive disclosure on its recent acquisition of an initial 51 percent stake in JG Summit subsidiary Digital Telecommunications Phils. Inc. (Digitel), PLDT said none of the sellers of their Digitel shares (including JG Summit which will receive new PLDT shares as consideration and the minority shareholders who can opt to receive PLDT shares or cash), can sell their PLDT shares for a period of one year without prior written consent from PLDT. The one-year lock-up period will start from closing date of the transaction or around June 30 this year.

Total consideration for the transaction is P69.198 billion, which can go up to more than P71 billion assuming PLDT succeeds in acquiring the 48.45 percent of Digitel held by the public in a tender offer to be conducted by PLDt soon.