Government opts for joint sale of PNB shares with Tan

The government is no longer pursuing its call-option plan for Philippine National Bank (PNB) since it is not interested in increasing its shares in the bank controlled by tycoon Lucio Tan.

The call option plan was supposed to be signed by the government and PNB once the bank’s rehabilitation plan is on stream. But it was junked in favor of the plan for a joint sale of the government’s remaining shares in the bank along with Tan’s stakes.

The aborted call-option would have given the government the option to bring back in three years, its stake in the bank to 30.4 percent, from 16 percent, through a buy-back scheme.

"The call option plan is no longer being talked about, instead it wants to fasttrack the joint sale of government’s remaining shares in PNB," Gison said.

Gison said government is preparing to resume talks with Tan on how to conduct the joint sale.

"Among others, the talks will include the pricing mechanism, whether a floor price will be established or an indicative price is more appropriate," Gison said.

The Department of Finance is currently preparing the guidelines for the sale of some 86 percent of PNB, this after Tan reportedly gave his nod to a joint sale with the government. Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura proposed the joint sale to hasten PNB’s rehabilitation.

The DOF failed to sell its remaining stake in PNB during the first time it entered into a joint sale agreement with Tan in May last year.

The BSP is convinced the joint sale might be the best option for PNB to implement its rehabilitation plan.

DOF is reviewing PNB’s rehabilitation plan for possible revisions. At the same time, DOF is also looking into the P10-billion loan arrangement between PNB and the state-run Philippine Deposit Insurance Corp. (PDIC).

Tan wants to pay P10 billion of its P15-billion loan from the BSP through a combination of  dacion en pago or payment-in-kind and a restructuring of the balance of P5 billion.

Under the dacion en pago arrangement, PNB is offering the PNB Financial Center in Pasay City for a minimum of P8 billion, and other prime properties which have not yet been identified. The remaining P5 billion will be restructured and settled over a period of eight years.

PNB has been trying to work out an agreement with the BSP to give up a real estates properties worth P20 billion. PNB currently has about P22 billion in foreclosed real estate which are mostly booked under its real and other properties owned or acquired account or ROPOA.

The PNB, saddled with debts, reportedly wants to settle most of its liabilities using the dacion en pago to a five-to 10-year buy-back plan. This will relieve the bank of non-earning assets so that it can go back to being profitable. – Rocel Felix