Lucio Tan to regain control of PAL

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By TESTCustomwebLP TESTCustomwebLP September 9, 2014 21:41

Lucio Tan to regain control of PAL

San Miguel Corp. has announced it will sell its holdings in Philippine Airlines to billionaire Lucio Tan, two years after San Miguel took management control and led the airline’s return to Europe.

San Miguel and Tan’s group signed an agreement yesterday, valued at $1bn, which requires Tan to meet certain conditions within a week. San Miguel bought an indirect 49% stake in Philippine Airlines and an affiliate for $500 million in 2012. As this publication reported on 28th August, any price paid below about $1.5bn represents an extremely good deal for Tan.

The purchase will give Lucio Tan full control of the airline at a point where it is expanding again after the US and EU restored the airline’s safety rating in April. For San Miguel, the deal is a step back from a recent diversification drive, with its core businesses including oil and food.

Shares of PAL Holdings Inc., the airline’s parent company, fell 1% in Manila, after rising as much as 6.8% earlier in the day. San Miguel gained 2.1 percent. The benchmark Philippine Stock Exchange Index fell 0.7%.

PAL Holdings posted a net profit of P1.46bn ($34 million) in the April-June 2014 quarter from a P1.06bn net for the corresponding 2013 period, and this trend is likely to continue.

Tan pledged shares in Philippine National Bank, LT Group Inc. and other real estate assets for a $750 million loan from four banks to fund the stake purchase and San Miguel’s advances to the carrier. BDO Unibank Inc. (BDO), China Banking Corp., Philippine National Bank and Asia United Bank provided the loan.

Tan, the Philippines’ second-richest man, said last year that he was considering offers for his 51% stake in the carrier, signalling a potential exit from the airline industry after two decades.

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By TESTCustomwebLP TESTCustomwebLP September 9, 2014 21:41