Business mogul Lucio Tan signed a $1-billion deal on Monday for the purchase of San Miguel Corporation’s 49-percent share of Philippine Airlines (PAL). The newly signed deal brings to an end the two-year partnership between the two groups, and restores management control of the flag carrier back to the Tan group.
SMC president Ramon S. Ang and Tan closed the deal at the head office of Banco de Oro Unibank, one of the financial institutions which financing Tan’s group to facilitate the buyback.
Ang later confirmed the buyback deal via text message, saying that he had signed the contract and that payment was expected “within one week.”
The payment covers the cost of the shares involved, as well as the cash which was advanced by San Miguel for PAL’s refleeting program.
Aside from BDO, several other banks have reportedly been tapped to fund the buyback, in part; namely China Banking Corp., Philippine National Bank and Asia United Bank. The bulk of the financing, however, will be shouldered by Tan.
Earlier reports alleged that Tan was displeased with certain factors regarding SMC’s management of PAL, among these:
• An excessively generous early retirement plan, which Tan felt would bump up expenses as well as lead to the loss of valued employees
• Issues concerning the supply of aviation fuel by SMC-run Petron Corp.
• The leasing of a several aircraft
• The alleged loss of Tan family privileges under SMC management
SMC, however, managed to restore profitability to the once financially struggling airline beginning the second quarter of 2014.
PAL reported a 604 percent increase in net earnings for the month of July 2014, amounting to $11 million; as compared with the same month last year, during which net earnings reached only $1.5 million. Furthermore, earning