SMC takeover of PAL beneficial for Philippines

Published : Wednesday, April 18, 2012 00:00 Written by : RITCHIE A. HORARIO

San Miguel Corp. (SMC) President Ramon Ang’s “long love affair with aircraft” will help boost the country’s airline industry, Sen. Serge Osmeña said recently.

SMC is set to take control of Philippine Airlines (PAL), a scenario which will make Ang the president of the flag carrier.

Osmeña said that Ang’s entry into PAL will help the flag carrier become more globally competitive and revert the country’s air sector back to Category one under the ratings of the Federal Aviation Administration of the United States.

“Ramon Ang has had a long love affair with aircraft and his entry into the industry will help bring our air sector back to Category one,” Osmeña told The Manila Times.

Ang, also the chief operating officer of SMC, has confirmed that he will be taking over management control of the country’s flag carrier.

He will be replacing Jaime Bautista, who will likely remain a member of the PAL board and parent company PAL Holdings. While business tycoon Lucio Tan will still be PAL chairman, Ang will also sit in the board of the two companies.

Osmeña, who is the chairman of the Senate committee on Banks, Financial Institutions and Currencies, expressed belief that Ang’s takeover of the flag carrier “will be beneficial to PAL and the public.”

To be recalled, Ang and Tan signed investment agreements last April 3 that will result in the issuance of new shares to SMC for a stake in PAL and low-cost partner Air Philippines Corp. (Air Phil).

Under the said agreement, the SMC group will infuse $500 million for a 49-percent stake in PAL and in turn, an assumption of management control.

The holding companies of PAL and Air Phil—Trustmark Holdings Corp. (Trustmark) and Zuma Holdings and Management Corp. (Zuma)—will issue new shares to San Miguel Equity Investments Inc., a wholly-owned subsidiary of SMC.

Osmeña said that with the infusion of more capital, PAL’s service will definitely improve and that the riding public will benefit from it.

“The larger the capital made available, the more planes will be deployed and the more flights the riding public will enjoy,” he added.

Ang also said that he will be implementing a number of changes aimed at improving the service of the airline company. 

Source: http://www.manilatimes.net/index.php/business/top-business-news/21224-smc-takeover-of-pal-beneficial-for-philippines

Key PAL executives tender resignation

17-Apr-12, 7:01 PM | Darwin G. Amojelar, InterAksyon.com

MANILA, Philippines - Key executives of Philippine Airlines (PAL) and its parent firm tendered their resignation last week after San Miguel Corp. acquired a significant stake in Asia's oldest airline, according to a highly-place source.

The source said the board of directors of PAL Holdings Inc. and PAL submitted their courtesy resignation to give San Miguel a free hand in organizing a new management team.

Jaime Bautista, president of PAL and director of PAL Holdings, also tendered his resignation.

PAL's board members include Charles C. Chante,  Joseph T. Chua,  Estelito P. Mendoza, Cesar N. Santos, Washington SyCip,  Lucio K. Tan Jr. , and Michael G. Tan. 

PAL's indendent directors are Antonio Alindogan Jr., Enrique Cheng, Alberto D. Lina and Gregorio T. Yu .

The directors of PAL Holdings include Tan Jr., Cheng, Alindogan, Michael Tan, Harry Tan, Wilson Young, Domingo Chua, Juanita Tan Lee, and Johnip Cua.

Through wholly owned subsidiary San Miguel Equity Investments Inc. (SMEII), San Miguel entered into investment agreements with Trustmark Holdings Corp. and Zuma Holdings and Management Corp. giving the former a 49 percent stake PAL and Air Philippines Express for $500 million.

Trustmark and Zuma are majority owned by Lucio Tan, who is also chairman of PAL and PAL Holdings.

In a disclosure to the Philippine Stock Exchange, San Miguel said its unit SMEII will not have a direct equity interest in PAL Holdings nor in PAL, the operating company.

"SMEII shall have resulting proportionate interests in PAL Holdings, PAL, as well as in Airphil, to the extent of its investment in Trustmark and Zuma, respectively," San Miguel said.

"The investment of the company was based on the enterprise value of PAL and Airphil taking into account a discounted cash flow analysis of the ongoing business of PAL and Airphil," the conglomerate added. 

San Miguel also said there were no conditions precedent to the transaction.

The company further said the investments do not have any immediate effect on the financial condition and operations.

Source: http://www.interaksyon.com/article/29664/key-pal-executives-tender-resignation