TUTUBAN Properties Inc. (TPI) is likely to be the latest addition to the list of subsidiaries of Ayala Land Inc. (ALI), which is a unit of Ayala Corp. (AC).
As a wholly owned unit of Prime Orion Philippines Inc. (POPI), TPI holds the “lease and development rights over a 22-hectare market district in downtown Divisoria.”
In a filing, POPI disclosed what attracted ALI to invest in POPI. In a posting on the website of the Philippine Stock Exchange, it said that “on December 22, 2009, it (TPI) renewed the contract of lease with the Philippine National Railways for another 25 years from September 2014 to 2039.”
If Divisoria would belong to ALI for 35 years, public investors would probably be curious to know why they could not participate in the ownership of this prime Manila property.
At the same time, while battling for their rights over stock issuances, the public would also want to know how ALI could make TPI a subsidiary when it acquired only 2.5 billion POPI shares, or 51.36 percent of the resulting 4.9 billion outstanding shares in POPI.
POPI as ALI’s unit
ALLI’s acquisition of 51.36 percent of POPI makes TPI an indirectly owned unit of ALI. How could then ALI claim to eventually own TPI 100 percent when it holds only 51.36 percent in POPI?
The Ayala group, to which ALI belongs as the conglomerate’s property investment arm, has made all the required disclosures regarding its deal with POPI. It has not omitted anything that it should disclose, in compliance with the full disclosure rule for companies listed on the PSE.
Yet, the public may have missed reading something very crucial about the deal.
Due Diligencer is doing away with the details of the ALI-POPI agreement. Instead, it is focusing on the “Agreement to Subscribe” between ALI and POPI, with the former as subscribers to 2.5 billion shares in the latter’s increase in authorized capital stock to 7.5 billion shares from 2.4 billion shares.
Said agreement provides that “ALI intends to acquire full ownership in TPI through POPI in order to control the development of the property and exercise rights under the TPI-PNR Lease contract . . .”
In short, ALI’s primary target in buying into POPI is TPI, as the direct holder of the development contract with government-owned PNR.
Again, the nagging question: How does ALI intend to control 100-percent ownership in TPI when it holds only the equivalent of 51.36 percent in POPI?
It is up to the public to speculate on the answer or answers to the above poser. I am not about to speculate on how the Zobels, as majority owners of ALI, would devise an ownership formula to take 100-percent control of Tutuban’s prime property which is the 22-hectare Divisoria commercial district.
No preemptive right
In the first place, POPI has already allowed ALI full control of TPI by depriving POPI stockholders, mostly the public, of their preemptive rights over the future issuance of shares. The next strategy would be for ALI to execute a 100-percent takeover plan of TPI that, however, would remain secret and confined only inside ALI’s boardroom.
Perhaps, lawyer Daisy Parker knows something that the public, including Due Diligencer, do not know. After all, aside from being a member of POPI’s seven-person board, she is also a senior vice president, chief legal counsel, compliance officer and corporate secretary of the company.
As an insider though and being privy to management, Parker may not be in a position to disclose more than what POPI may be required to file with the Securities and Exchange Commission and the Philippine Stock Exchange.