Market cool to Ayala-Campos bid for Global City project

The stock market hardly reacted to the landmark deal between Ayala Land Inc. and the Metro Pacific-controlled Fort Bonifacio Development Corp. (FBDC) wherein the former has agreed to provide an P800-million financing facility to complete a major residential project at the Bonifacio Global City.

At the close of yesterday’s trading, ALI shares were unchanged at P5 each while MPC stocks even went down to 23 centavos from their ending prices last Tuesday.

Market analysts said the agreement, while considered a breakthrough particularly for the Ayala group, still lacks details on the option to develop an area within the Global City. Under the terms of the deal, FBDC agreed to grant ALI and its partner the United Laboratories (Unilab) Group the option to undertake the development of an area to be mutually determined and agreed upon by the parties.

This option, however, is exercisable by ALI and Unilab within two years from the first disbursement under the funding facility.

The P800-million funding agreement has a term of two years, carries an interest rate of 14.5 percent per annum, and is secured by a real estate mortgage on several parcels of land owned by FBDC with a total area of approximately 41,000 square meters.

With the bridge financing, FBDC will be able to complete the development of the Bonifacio Ridge condominium project, its first mid-market residential venture located on a prime lot within the Crescent west neighborhood adjoining the Manila Golf Club. FBDC began the construction of the twin tower project in May 2000, targeting its completion in early 2004.

This development marked the first time ALI has set its foot on the Bonifacio Global City, almost seven years after it was beaten by the MPC-led Bonifacio Land consortium for the right to develop the scaled-down 150-hectare portion of the former military base.

Since then, ALI has attempted to break into the property several times but ended up empty-handed. Last year, BLC rejected its P1.23 billion offer for the development rights over an 18.9 hectare portion at the northern district of the Global City despite ALI being the lone bidder.

ALI also failed to acquire MPC’s 69.6 percent stake in BLC and decided not to pursue with the negotiations late last year, in turn rejecting the $200-million counter-offer put up by the MPC group.

ALI put up a "binding offer" for MPC’s interest in BLC exactly a year ago, part of which is the transfer to MPC of an economic interest in specific portion of shares in Metro Rail Transit Corp., which is less than 15.8 percent of MRTC’s total outstanding shares.

But with MPC saddled with over P16 billion in debts, it has embarked in a debt restructuring and balance sheet management program where several parties, including ALI and the Unilab Group, have been invited to participate largely through participation in certain on-going projects at the Global City.