San Miguel agrees to sell PAL stake back to Tan
MANILA, Philippines (UPDATED) – San Miguel Corporation has agreed to sell legacy carrier Philippine Airlines (PAL) back to tobacco billionaire Lucio Tan.
In a disclosure to the Philippine Stock Exchange, San Miguel said they signed an agreement “whereby [San Migueo] expressed willingness to sell its 49% stake to the group of Dr. Lucio Tan, and the latter has expressed willingness to buy the said 49% stake.”
It added the deal is “subject to the fulfillment of certain conditions.”
Informed sources said San Miguel gave Tan a week to raise $1 billion to acquire the stake.
Last August, San Miguel confirmed it was in talks with the Tan group for the buyout. Tan owns 51% of PAL. (READ: PAL defers stockholders meeting as buyout talks drag on)
San Miguel bought 49% of PAL’s parent, PAL Holdings, in April 2012 for $500 million. The diversified conglomerate also reportedly made cash advances to finance the airline’s fleet modernization program.
The anticipated change in PAL ownership comes after the company posted a financial turnaround and as it embarks on expansion in the US and Europe.
The airline resumed flights to London in November last year. It plans to start flying to New York this year.
PAL’s comprehensive income from the period April-June amounted to P1.45 billion, a reversal of the P500-million comprehensive loss it registered in the same period last year. Revenues in the quarter surged 47% to P27.3 billion from P18.52 billion a year ago.
The carrier completed a $261-million modernization program to replace legacy aircraft.
The program involved the replacement of 20 aging planes like the B747-400, with modern, fuel-efficient ones. The move is seen to reduce costs.
After taking back full control of PAL, sources said the Tan group would likely get Abu Dhabi-based Etihad Airways as partner. The foreign airline is expected to buy a 40% stake in PAL. – Rappler.com