Tan gets first crack at gov’t stake in PNB

Tobacco and liquor magnate Dr. Lucio C. Tan will get the first crack at government’s 45-percent interest in Philippine National Bank (PNB) which will be put up for sale in September to raise more revenues and narrow this year’s budget deficit.

The government earlier announced plans to sell its entire stake in PNB before the Sept. 16 expiry date of an agreement with Tan to jointly divest from the bank.

A copy of an agreement between Tan and the government submitted by PNB to the stock exchange Wednesday showed that the tycoon will be the first to be offered the shares held by the state in PNB if his group accepts the floor price to be set by the government.

Under the joint sale agreement, Tan’s group will be allowed to match the highest bid made by a third party for the government’s shares, which are part of the joint sale shares at the required public bidding or, in the case of a failed bidding, at the highest negotiated offer.

The agreement also stipulated that Tan will be stripped of his right to match the best offer for the government’s 45 percent stake if he rejects the floor price.

In 2002, Tan agreed with the government to sell his 45 percent stake in PNB so that the government could attract a higher price for its stake when it decides to unload them. Tan agreed to the condition in exchange for a P25-billion loan that was key to rehabilitating the country’s fourth largest private lender, which suffered heavy withdrawals from depositors in 2000.

The government is now looking for a financial adviser for the privatization. The joint sale of the combined 90 percent stake is currently worth around $400 million.

PNB returned to profitability about half way through its five-year rehabilitation plan. Its net profit stood at P353 million last year, more than double 2003’s P168-million income, preliminary data show. The improvement is attributed to higher interest earnings.

Finance Secretary Cesar Purisima earlier said three investors have already expressed interest in buying the shares although he refused to name them.

However, industry sources have indicated that Tan, who also owns Allied Bank, wanted to increase his shareholdings in PNB.

If the taipan takes part in the bidding, he will become the single biggest shareholder of PNB since the shares will be sold as a block.

The bank is in the fourth year of a five-year rehabilitation program set up to nurse it back to health after majority of its loans turned sour in the wake of the 1997-1998 financial crisis.

As of end-2004, PNB is ranked fifth in capitalization among commercial banks, with P24 billion; and sixth in total assets, with P220.2 billion.