Gatchalian to pull out 25% stake in Air Phils

It's the end of the airline partnership between two business tycoons and close associates of President Estrada: Lucio Tan and William Gatchalian.

Just two weeks after the crash of an Air Philippines flight in Davao -- the worst in local aviation history -- Gatchalian's Wellex Group said it would pull out its 25-percent interest in the country's second largest air carrier.

Arthur Ponsaran, corporate secretary of Air Philippines International Corp. (APIC), the publicly listed holding company representing the Gatchalian group's stake in the airline, told the Philippine Stock Exchange that the decision was made "on account of the continuing adverse condition of the Philippine economy and the stock market which has adversely affected the viability of the proposed investment."

APIC, which will revert back to its former name Forum Pacific Inc. upon withdrawal of its investment in Air Philippines, is Gatchalian's corporate vehicle for his group's other equity holdings in Express Savings Bank, Petrochemicals Corp. of Asia Pacific, and Philippine Estates Corp.

At the end of 1999, APIC had an authorized capital base of P3.5 billion and a market capitalization of P878.456 million, on total outstanding shares of 1.464 billion priced at 60 centavos each.

The Gatchalian group's pullout from Air Philippines will leave 70-percent owner Lucio Tan, along with several business partners, in full control of the airline. The APIC board has a pending resolution to invest 25 percent in equity into Air Philippines when Tan, who also controls flag carrier Philippine Airlines, took over the company in early 1999. The proposed investment, however, was not set into full motion pending approval by the stockholders and clearance from the regulatory agencies.

APIC was formerly traded as Forum Pacific Inc. until Sept. 26, 1997, when its stockholders led by Gatchalian approved the acquisition of the entire outstanding shares of Air Philippines, including all stockholder advances, representing all its assets, franchise, goodwill and operations.,

In exchange, Forum offered to transfer to Air Philippines its holdings in the other companies, along with the issuance of 1.797 billion new shares from existing authorized but unissued stock and from the increase in its capital stock. -