Biz Buzz: Short-term compromise deal
All’s well that ends well? That’s the big question on everyone’s mind after the Energy Regulatory Commission last Thursday ordered the feuding parties in the Zamboanga City electricity scene to enter into a compromise deal that would restore power supply to the blackout-plagued locale. As such, Alcantara family
owned generation firm, Western Mindanao Power Corp. (WMPC), and Crowninvestments Holdings Inc., the investor-manager of Zamboanga City Electric Cooperative (Zamcelco), agreed that the former would resume supplying electricity to the latter.
Energy regulators convinced both parties to enter into a deal where the new management of Zamcelco would pay WPMC two pending invoices that were part of the bigger P441-million billing dispute between both parties.
The result will be stable power supply for the city again, or at the very least, less power outages for now.
To recall, the joint venture of Crown and Desco Inc. won the investor-management contract for Zamcelco last year with a P2.5-billion bid. This capital infusion has allowed the cooperative to settle P1.2 billion in outstanding debts and invest in equipment upgrades.
But Zamcelco and WMPC have been locked in a dispute since the new management of the power co-op alleged that the latter over-billed the former over the last three years. In response to Zamcelco withholding payment because of the dispute, WMPC suspended its supply to the city, saying it could no longer afford to run its bunker fuel-fired power plant.
Biz Buzz learned that this compromise deal—said to be worth P204 million for the October-November 2018 billing period—mark’s the third offer by Zamcelco’s new manage
ment, Crowninvestments, of a partial payment to cover for WMPC’s operational and fuel costs. The first offer of P150 million was made in February, and the second offer was P220 million was made on earlier this month, both of which were rejected by the Alcantara firm.
So how long will this truce last, given that all other disputes between both parties are still live and pending before regulators? It is expected to hold for all of 60 days, at least. That’s good enough to get Zamboanga City through the hottest summer months.
The question is: Will the two power groups resolve their differences peacefully after this truce ends? Or will they be back at each other’s throats? Don’t hold your breath.
Nice problem
What does a former central bank governor do while waiting for the two-year ban on accepting jobs in the financial services industry? Accept directorships in prestigious but nonrelated firms, of course.
In the case of former Bangko Sentral ng Pilipinas Governor Amando Tetangco
Jr., the offers have been flooding in in recent months, and he’s had to be very selective as to which directorships he accepts.
But the latest one definitely looks like an excellent choice.
Biz Buzz learned that Tetangco was recently named a director of Toyota Motors Philippines, the joint-venture company of the Ty family and the world’s biggest automaker.
As part of the board of the local Toyota unit, Tetangco will help steer the firm to retain its dominance in the increasingly competitive Philippine market for vehicles. That also means he will work closely with Alfred Ty, who is in charge of the automotive portfolio of the group that his late father, George, built.
Will Tetangco get the chance to work with Arthur Ty, too, who runs Metrobank and the group’s other financial services firms? That would be tempting, but probably not if tycoon Lucio Tan has anything to say about it.
You see Tetangco is already a board member of Tan’s Philippine Airlines and word on the street is that the former BSP chief will be named chair of Tan’s Philippine National Bank once the two-year prohibition on Tetangco for taking banking jobs ends in three months.
Oh, and let’s not forget the Sy family, which has also brought Tetangco closer to its own fold by naming him director of Belle Corp. a couple of years ago. Could a BDO consultancy be far behind?
Given this array of possibilities (and not even counting his directorship in the St. Luke’s medical group), Tetangco is truly spoilt for choice. What a nice problem to have. —DAXIML. LUCAS
Next generation Sys step up
As the SM Group wrapped up another week of annual meetings for its various listed companies, it’s easy to leave with the impression that the second-generation Sys are happy to continue building on the vision of their father and group founder, the late Henry Sy Sr.
It is, of course, a business strategy anchored on the strength of the Philippines’ consumer driven economy: retail, property and banking.
There are a multitude of other investments, small by the revenue standards set by SM’s core businesses. But the underlying themes set in the meetings of SM Prime and parent firm SMInvestments is that the best way to ensure growth in shareholders’ value is for the group to stick to what it knows best.
Still, key changes for the group have always come in gradual waves. In more recent years, the group took the big step of handing over key management positions to professionals.
This year, we noticed more of the third-generation Sys in attendance in the meetings—or at least more of them were being introduced to the press by their parents.
The younger Sys also appear to have the freedom to follow different career paths. For the second generation, it was understood they would be joining the family business at a young age. Their children, however, are encouraged to explore other entrepreneurial activities outside the group.
Hans Sy, who used to run SM Prime on a daily basis before appointing Jeffrey Lim as president, recalled a once harrowing but now cherished memory of the time his father asked him to help out when he was 13 years old.
He told Biz Buzz he came to work in a brand-new shirt only to be asked to clean out the garbage. These days, one of his sons, who was present during the meeting of SMPrime, is developing small townhouse projects from the ground up in Melbourne, Australia.
“Here I don’t think he will learn much. Everything is being done by other people,” Sy said.
He said about a handful of the third generation are active in different parts of the SM Group.
This includes Mara Coson, the daughter of SM Investments vice chair Teresita Sy
Coson, who works in the retail group and is growing more visible in SM’s efforts to expand fintech partnerships such as its tie-up with GrabPay.
Harley Sy, former president of SM Investments before the job was assigned to Frederic DyBun
cio, said the group was watching disruptive trends even if they don’t talk about it publicly.
He’s not keen on making personal investments in emerging technology businesses but he said he would support his children who are willing.
“I told them just don’t burn the house down,” he quipped.
It seems the next wave in SM is taking shape.