Ayala Group to sell Singapore subsidiary

The Ayala Group has made another move to consolidate its offshore property business with its decision to push through with the privatization of its Singapore-listed Ayala International Holdings Ltd. (AIHL).

In a disclosure to the Securities and Exchange Commission (SEC), Ayala Corp. said Routledge Investments Pte. Ltd. has made a voluntary conditional cash offer to acquire all the issued ordinary shares in AIHL.

Routledge is a wholly-owned subsidiary of Ayala International Pte. Ltd. (AIPL), another wholly-owned subsidiary of Ayala Corp. also based in Singapore.

Rufino Luis Manotoc, Ayala Corp.’s managing director and head of strategic planning, said the offer will be conditional upon Routledge having received acceptance that would cause it to hold 90 percent or more of the voting rights of AIHL.

Manotoc said the offer was made for the purpose of the privatization of AIHL which had earlier absorbed all of AIPL’s real estate development projects.

AIHL is now engaged in property investment, development and trading. The company’s investments are mainly in Singapore, Australia, Hong Kong and Japan where the company was engaged in office, retail and residential development.

The shares of AIHL are listed on the main board of the Singapore Exchange Securities Trading Ltd.

At present, Manotoc said 82.27 percent of AIHL shares were held by Ambeca Pte. Ltd. and Cottesloe International Ltd., both of which are whole-owned by AIPL.

In 2000, Ayala Corp. completed the transfer of its real estate projects from AIPL to AIHL with the intention of focusing and facilitating the Ayala Group’s efforts to invest in the region’s property market.

AIHL had also completed a two-stage restructuring plan that included the divestment of non-core assets and the transfer and consolidation of real estate investments of AIPL to AIHL.

The Ayala Group has been consolidating its organization for the last three years, shedding its non-core businesses and concentrating mainly in property, banking and telecommunications.

Last year, the group suffered a dramatic 33-percent decline in net income due to mounting financing and hedging costs which eroded its earnings from P3.15 billion in 2000 to P2.1 billion.

According to Ayala Group, its net income was affected by financing and hedging costs that it incurred to cover dollar-denominated loans.

While US dollar loan rates are at 7.9 percent per annum at the beginning of the year, the rate dropped significantly to 4.7 percent p.a. by the end of the year.