New Piatco owner in talks with government

After undergoing a management shakeup, the consortium that built the new Ninoy Aquino International Airport Terminal 3 (NAIA-3) began talks yesterday with the government to settle a drawn-out legal battle over the mothballed facility and expedite government efforts to open it for operations.

Jose Lina Jr., President Arroyo’s former interior secretary and now president of Manila Hotel Corp., met with Executive Secretary Eduardo Ermita about the government’s plan to have the facility up and running by November.

Manila Hotel Corp., which owns the five-star Manila Hotel, gained control of Philippine International Air Terminals Co. Inc. after buying the equity stake of three firms in Piatco, including that of Piatco’s German partner, Fraport AG.

Under the previous management, Piatco was opposed to the government’s efforts to open the facility.

The consortium has been locked in a legal dispute with the government since 2002 after Mrs. Arroyo abandoned Piatco’s contract to build and operate the terminal because of alleged one-sided provisions.

Last December, the government seized the terminal after the Supreme Court sided with the government and is now preparing to open the facility by November. Piatco has contested the Supreme Court ruling and the government seizure.

Lina said they will "try our best to talk with all parties concerned, including the government, so that we can open NAIA-3 even much earlier than that."

"We can discuss what can be done with the objective of using these facilities which will be for the good of everyone," he explained.

Talks with the government will include the legal battle over the terminal. Aside from the legal tussle before the Supreme Court, the government is facing a suit filed by Piatco before an international arbitration panel in Singapore and another by Fraport in the United States.

"To eliminate lengthy and unnecessary litigation and arbitration prejudicial to the image and interest of all parties concerned, upon conclusion of the purchase of Fraport’s share, Fraport and Piatco, including its stockholders will cause the mutual withdrawal and dismissal of all civil and criminal cases pending here and abroad for the sake of unity, cordial relationship and economic prosperity," Lina said in a statement issued by the Manila Hotel Corp.

"That’s what we will try to work out with government so that we can iron them out as soon as possible," Lina told The STAR. "Because the opening of the NAIA-3 would be for the good of all, for the good of the country’s economy, good for the people, good for investments, good for employment, good for tourism. We really would like this to open because the benefits are for all of us."

Lina added it is in the government’s interest that the talks succeed because it has a 15-percent equity stake in Manila Hotel.

Manila Hotel Corp., owned by Manila Bulletin publisher and magnate Emilio Yap, took control of over 50 percent of Piatco after it bought the equity of SB Airport Investments Inc. and Sojitz Corp. of Japan for a total of $30 million.

Last Friday, Lina and Fraport senior vice president Peter Henkel signed an agreement selling the German company’s 30-percent equity stake for $200 million.

Malacañang is assessing the deal’s implications, Press Secretary Ignacio Bunye said. "What we can say in general terms, it is important that the terminal be opened as soon as possible and the government is doing all it can," he said.

Ermita had earlier indicated that although nothing would prevent the government from deciding to transfer ownership of the terminal to a private operator, it prefers to operate the airport for a period of time as it is profitable.

The government earlier said one of the options being considered is to operate the airport so it can make money to pay for court-ordered compensation to Fraport and Piatco following its seizure of the terminal.

The legal battle over the terminal has been one of the business community’s major concerns because it highlighted the difficulties foreign investors face when investing in the Philippines, especially in desperately needed infrastructure projects.

Opening the terminal for operations is one of the major items in the Arroyo administration’s economic agenda.

The Fraport buyout took Malacañang by surprise when it made the news last Saturday.

Lina said negotiations with Fraport began last year. "This is a private transaction. We are not duty-bound to convey what is being discussed by private parties," he explained to The STAR.

Fraport’s decision to accept Manila Hotel Corp.’s $200-million offer for its stake in Piatco effectively ends its dispute with its local partners in Piatco and with the government.

Fraport had sought World Bank arbitration to settle a dispute over compensation for building the terminal after Mrs. Arroyo abandoned Piatco’s government contract. The government had rejected Fraport’s request for $425 million in compensation.

Fraport earlier said in a statement that it would receive an initial sum of $50 million once it signed the deal, followed by the remaining $150 million within six months of signing.

It does not plan to pursue compensation from the government following the buyout.

The new terminal was completed in 2002 but its opening was delayed by a squabble between Fraport and its Filipino partners in Piatco, led by the Cheng family.

Fraport was further caught in the middle that year when Mrs. Arroyo abandoned Piatco’s contract to build and operate the terminal, claiming that one-sided provisions in favor of the consortium were inserted in the agreement after it had been signed.

In 2003, the Supreme Court nullified the contract, saying Piatco was not qualified to bid for it and that one-sided provisions in its favor were inserted after the contract was signed.

Armed with that ruling, the government last December got permission from the Pasay City regional trial court to take over the terminal and get it ready for operations. — With Paolo Romero, Edu Punay, Sandy Araneta, Rainier Allan Ronda