Signing of pact between gov't, Tan hits snag

The signing of a Memorandum of Agreement (MOA) between the Government and businessman Lucio Tan has hit a snag, Finance Secretary Jose T. Pardo said yesterday.

He said legal impediment has surfaced with regard to Tan's ownership of PNB shares which were assigned to him by the PNB-Retirement Fund Inc.

"Under the arrangement Tan had with the PNB-RFI, there has been no transfer of ownership of the shares yet," Pardo said.

Under the arrangement Tan has with PNB-RFI, Tan basically extended a loan to the entity to be able to purchase the PNB shares.

The PNB shares were used as collateral for the loan. However, Tan has a "put and call" option whereby he can either call on the loan or acquire the PNB shares at a price of P160.23 per share.

The put and call option is valid up to September this year. Tan and PNB-RFI have not exercised the put and call option so far.

Pardo learned from his legal experts that the MOA would be technically defective as it is drawn up because it cover shares which are already owned by Tan.

To be legally correct, the MOA must again be revised.

Pardo is trying to sort out the technical problem to ensure that the MOA is signed as scheduled today in Malacañang.

If the problem is not resolved by today, Pardo said that he would still try to work it out as soon as possible since the privatization of PNB is a commitment to the International Monetary Fund.

The IMF, Pardo said, is still asking the government to explain the chronological series of events that led to Tan's acquisition of PNB shares held by the government.

They also wanted to find out if everything was done legally.

However, Pardo said, the IMF had no objection to the government teaming up with Tan to sell their PNB shares as a block to be able to get a better price.

The effort of the government to hammer out a block sale, Pardo said, is resulting in more interest in the government bank, adding that a lot of banks have expressed interest in PNB. -- Marianne Go