InterAksyon.com
The online news portal of TV5
San Miguel Corp. wants not just Philippine Airlines, but also the Lucio Tan-owned budget carrier Airphil Express folded into the impending purchase into the flag carrier, according to sources with access to both parties.
San Miguel has reportedly offered $500 million in exchange for a 49-percent stake in both PAL and Airphil, in addition to securing management control of the two airlines.
Although a separate airline altogether with its own franchise, Airphil Express is entirely dependent on PAL, leasing its entire fleet, as well as half a dozen more Airbuses on order, from the flag carrier.
As disclosed by San Miguel before the New Year, the planned venture would finance the "refleeting and modernization" of Asia's first but ailing airline. But instead of a shareholder sale, the deal would be structured, according to the sources, by way of increasing the capitalization of the two airlines.
In plainer language, the $500-million would go to buy new planes, instead of acquiring the Tan shareholdings in listed PAL Holdings.
In a plan patterned after Philip Morris' merger with Tan's Fortune Tobacco nearly two years ago, the 77-year-old taipan would also remain chairman of the airline combine, with San Miguel president Ramon Ang, an aviation buff, taking the chief executive position.
And as with the Philip Morris-Fortune model, the extended Tan clan can expect their umbilical cords on the considerable outsourced contracts of the two airlines being cut, despite the taipan holding on to a nominal majority stake in the putative alliance with San Miguel.
Tan, according to the sources, is being advised in this ground-breaking deal by UBS, Ang by Evercore Partners.
According to San Miguel, it was the taipan himself who solicited the bid.
"We confirm that the company was invited by Mr. Lucio Tan, the controlling stakeholder of PAL Holdings, Inc., to participate and assist in the refleeting and modernization of the aircrafts," San Miguel said.
Another invitee, PLDT chairman and TV5 controlling shareholder Manuel V. Pangilinan, decided not to push through with the bid, explaining to the press later that an acquisition into PAL would put him into conflict-of-interest position with his Digitel partner, Cebu Pacific owner John Gokongwei.
Pangilinan was being advised by the aviation-focused investment bank, Seabury Group, before dropping out from what turned out to be a two-man race.
According to the grapevine, San Miguel is expected to finish its confirmatory due diligence by the end of January. The regulatory approvals, should the deal push through, are expected to be cleared by mid-2012, in time for the expected category 1-upgrade of the Philippines from the US Federal Aviation Authority.
PAL president Jaime Bautista, a three-decade veteran with the Lucio Tan Group, is expected to remain chief operating officer during the transition.
Except for a Boeing 737-300 and eight short-hop Bombardiers that had been assigned to Airphil Express, PAL's 51-aircraft fleet as of March 2011 were all flying under finance or operating leases.
Money-go-round
• There is apparently a market for P25,000-shirts (over $500) in the Philippines. That is how much a long-sleeved, bespoke shirt - measured in Manila but cut, sewn and flown all the way from Germany - from the van Laack shop in Greenbelt 5 costs.
The local franchise of the luxe German shirtmaker, a favorite of the European royalty and VIPs, is held by Marilou Koa, the better and entrepreneurial half of French Banker founder/owner Johnlu Koa.
• Three years after the so-called SGV 14 left the country's largest audit firm, the breakaway Reyes Tacandong group has grown literally by leaps and bounds to 350 partners, associates and staff. The new audit firm is opening its second provincial branch, in Cebu, next month.
