Alvarez takes over Philtranco

Logging and automotive tycoon Jose "Pepito" Alvarez has acquired majority control of Philtranco Services Enterprises Inc. (PSEI), the only bus carrier in the country with a nationwide public transport franchise.

Alvarez, who is also chairman of Columbian Motors Corp., now sits as chairman of the PSEI board of directors after he bought into the company for an estimated P2 billion, including the infusion of fresh equity.

With a business empire founded out of his earnings from various logging concessions, particularly in Palawan, Alvarez is closely identified with Security Bank owner Manny Zamora, brother of Executive Secretary Ronaldo Zamora.

According to an industry source, Alvarez was able to secure a P2-billion loan enabling him to make the acquisition late last year, through his wholly-owned company, PSEI Holdings Inc.

Official documents showed that Alvarez secured a P452.14 million from Security Bank, payable in three years at 16 percent interest per annum. An industry source said Alvarez was also able to borrow from government financial institutions.

The source said Alvarez acquired 95 percent of Philtranco from its former owners led by the Hernandez family who also owns and operates Victory Liner and Five Star Bus Co. The deal was brokered by another Alvarez firm, Penta Pacific Corp..

After the acquisition, PSEI applied and secured registration from the Board of Investment (BOI) for its P603-million fleet expansion program which would enable the company to service new routes nationwide.

PSEI's BOI registration entitled the company to a three-year income tax holiday from August 2000 subject to a base figure of P520.119 million, the company's highest revenue for the past three years.

For the first five years, PSEI would also be allowed an additional deduction from taxable income of 50 percent of the wages as well as unrestricted use of consigned equipment for 10 years from date of registration.

In its registration papers, it was indicated that PSEI Holdings now owns 37.912 million shares of PSEI as well as 9.737 million class A preferred shares. British Leyland, on the other hand, still owns 9.78 million preferred class B shares.

As of 1998, PSEI assets stood at P558 million with gross income amounting to P520 million. However, with P498.393 million in liabilities and lingering problems in operations, the company reported losses from 1996 to 1998 when its losses amounted to P29.1 million.

Alvarez's entry into the company is expected to boost the sales of his other companies, particularly Columbian Motors which has been PSEI's supplier of assembled buses. Columbian itself imports bus bodies, chassis and bus engines.

PSEI's existing fleet service Camarines Norte, Camarines Sur, Naga, Iriga, Albay, Legazpi, Sorsorgon, Davao and Leyte. It also ferries passengers direct from its Pasay terminals to Davao City and Cagayan de Oro.

PSEI has a total of nine terminals nationwide, three sub-terminals and 22 stations. Its expansion project is expected to generate a P435.935-million income in the first year from a P1.646-billion revenue. By the end of the five-year program, the company expects a P749.343-million net income from a P2.41-billion revenue.