PAL's convoluted ownership structure has been at the heart of its continuing problems. At present the controlling stake of 67 per cent is owned by PR Holdings, while the remaining 33 per cent is in the hands of two government bodies, the Government Service Insurance System and Land Bank of the Philippines.
While PR Holdings is nominally controlled by Lucio Tan through his 51 per cent shareholding, three other state-controlled firms - Development Bank of the Philippines, Philippine National Bank, and the military pension fund AFP-RSBS - have a combined 20 per cent. The remainder is in the hands of two private investors, the Ayala Corporation and the Cojuangco group.
The proposed solution involves Tan dissolving PR Holdings and investing $190 million to double PAL's equity. PAL's capitalisation would be raised to 10 billion pesos (US$382 million) with 5 billion new shares.
The three state-owned firms can hold on to their shares in PR Holdings for six years, after which they can sell to Tan or offer them to another buyer. They are guaranteed the share value will not fall below 5 pesos (19 US cents) by 2001. The government agencies have agreed not to purchase any new stock, allowing the government's holding to fall to 23.2 per cent.
If they do not buy any new shares the Ayala and Cojuangco stakes would drop to 10.05 per cent, giving Tan 66.75 per cent of the airline. The unknown in this equation is the intention of the two private groups. Garcia refutes suggestions that Ayala's investment vehicle, Cumulus, led by Bank of the Philippines executive Xavier Lionaz, is considering subscribing to new shares to stop Tan sealing absolute control.
Source: Airline Business
