Biz Buzz: Mactan-Cebu
BIG conglomerates that failed to bag the Mactan-Cebu International Airport PPP deal still have a chance to capitalize on a real estate play right next to what is being dubbed the world’s first resort air gateway.
The winning consortium led by Megawide Construction Corp. and India’s GMR Infrastructure is set to bid out a contract to develop and operate an adjacent six-hectare property meant for a mixed-use development by January 2016, our sources say.
Some might be wondering why January 2016. Well, that’s because of the usual delays on the property turnover to the winning bidder that should have happened at the start of this year. The turnover is now apparently set for December 2015.
In any case, interest here is quite high with all or almost “all major listed” and probably unlisted property developers already expressing their interest to develop the land, which will likely house retail facilities and, maybe, a hotel.
We’re assuming that includes the SM Group of Henry Sy, whose family is a major shareholder of Megawide. Advising Megawide-GMR in this transaction is Colliers International, we were told.
Some of these companies or their parents had bid for the Cebu airport in 2014, although as readers would recall, Megawide-GMR came out on top with an aggressive P14.4-billion premium offer to the government.
It won’t be the usual bidding parameters, too, for the showcase project that Cebuanos and the rest of the country can be proud of, according to Megawide chief financial officer Oliver Tan.
As such, he has this tip to offer:
“It’s not necessary the best lease rate but it is who can offer value creation. It should complement the airport,” Tan told Biz Buzz. Okay, not much help but you all get the idea. Miguel Camus
No deal?
“GROSSLY inadequate” is how the Home Guaranty Corp. (HGC) described the offer of businessman
Reghis Romero II to pay it a total of P2.9 billion in return for the government agency to get out of the messy picture involving the long running Smokey Mountain Development and Reclamation Project (SMDRP) dispute.
In a letter sent to Romero’s RII Builders Inc., HGC said that, according to its books, the agency’s total exposure in the SMRDP stood at P5.274 billion and not merely P2.9 billion.
HGC also told Romero that it could not enter into any universal settlement with R-II Builders without settling the legal controversy on the ownership of the disputed shares of Harbour Centre Port Terminals Inc. (HCPTI).
The government agency is, of course, referring to the ongoing legal battle between Romero and his son, Michael, for control of HCPTI which is pending with the courts (and we really mean ‘courts’ in the plural form).
“With this, HGC resolved that RII Builders’ legal standing and capacity to enter into a universal settlement with HGC is not possible at this time and any possible settlement with R-II Builders could potentially expose HGC into a lawsuit,” HGC said in a statement sent to Biz Buzz.
The SMDRP is a 1993 joint venture between Romero’s R-II Builders and the National Housing Authority (NHA) to convert the Smokey Mountain dumpsite into a habitable housing project.
HGC acted as guarantor of the bonds dubbed Smokey Mountain Project Participation Certificates (SMPPC) intended to raise funds for the project—a deal that hit a snag when NHA failed to pay R-II for the work it did (according to Romero, that is).
HGC was the designated guarantor of the bonds (for which it was paid some P500 million as its “insurance fee”).
In any case, Romero said the P2.9-billion cost that his firm was willing to pay was put on the table by no less than HGC during one of the recent Congressional hearings on the matter.
“And now all of a sudden, they’re saying it’s P5.2 billion, when the P2.9 billion quote came from them,” the businessman said, adding that the dispute he had with his son was immaterial since HCPTI was not a party to the issue with HGC.
Nonetheless, Romero said he was more than willing to ante up the price… provided HGC shows proof that its total exposure to the 1990s-era deal really does stand at P5.2 billion. Who will blink first? Watch this space, folks. Daxim L. Lucas
Passport wars
WHEN a company stands to lose one of its biggest accounts, expect it to do everything possible to salvage the situation.
Such is the case with a certain foreign firm that has been handling the printing requirements of the Department of Foreign Affairs by way of the Bangko Sentral ng Pilipinas. It remains a supplier of the BSP to this time.
The company has been enjoying and automatically renewing the multimillion-peso contract to print official travel documents for years, until a series of unfortunate events like delays in production, delivery of substandard passports with imperfect stitching, and rejection of the machine-readable passports in foreign immigration counters forced the DFA to reconsider other alternatives.
It was, therefore, decided that the time was ripe for a government corporation to handle the job from end to end (from personalization, enrollment, lamination and delivery) in a secure printing site.
This government firm—Apo Production Unit—has proposed to take over the printing of the passports, but the foreign firm is moving heaven and earth to block this loss of their business.
“Spies” have been feeding disinformation to various quarters to suggest that the government firm is incapable of doing what the foreign company has been doing. By all indications, however, Apo’s new machinery and use of superior technology gives it the edge—at no additional cost to passport applicants, by the way. Daxim L. Lucas
7-Eleven goes online
CONVENIENCE store operator Philippine Seven Corp. (PSC), the local licensee of 7-Eleven stores in the country, is bracing for a more competitive environment not just by building physical stores, which by the way will expand by 400 this year to end the year with about 1,700. As PSC seeks to protect its market leadership, it plans to team up with a technology provider to roll out a new e-commerce platform before the end of the year.
Such an e-commerce platform will allow consumers to place their orders and pick up their goods from the physical stores where the transactions will be settled in cash.
“We seek partners so we can stick to what we do best—take payments in real time and deliver goods from our warehouse on a daily basis,” PSC president Victor
Paterno said. “We have the infrastructure but not the online expertise so we are opening our platform to those who do.”
The e-commerce platform won’t go as far as other convenience stores in other markets had tried to do online: Sell not just its own products but other stuff such as digital music, distribute books, book travel services or even print digital pictures. As the e-commerce efforts of other convenience stores failed, PSC reckons it’s best to stick to its expertise and sell its own merchandise. Doris Dumlao-Abadilla