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Joseph Lo

First Pacific's Philippine property arm may sell a controlling interest in its flagship Fort Bonifacio development in Manila.

Metro Pacific, an 80.6 per cent-held subsidiary of First Pacific, said it was reviewing possible options to deal with the troubled urban redevelopment project, including the selling of 'a significant or even controlling interest in the project'.

Metro Pacific said it had hired investment bank ING Barings to help it 'review strategic alternatives for its controlling interest in Bonifacio Land Corp' as part of an ongoing process of addressing its debt-laden balance sheet.

'Metro Pacific's primary short- to medium-term objective is to bring . . . debts to a size that can be sustained by our ongoing operations,' said Metro Pacific president Ricardo Pascua.

'We continue to sell [residential] units within the Pacific Plaza Towers development and have this year concluded the first land sales since 1996.

'Nevertheless, we recognise that in meeting our debt reduction objective, Metro Pacific will need to sell substantial pieces of property within the Bonifacio Global City and, if necessary, a significant or even controlling interest in the project.'

Hopes had been high in recent weeks that the proposed sale of development rights for a prime site within the project would have generated enough cash to repay some of Metro Pacific's most pressing debts.

However, it emerged that the only serious bid was a low offer from rival developer Ayala Land which the company rejected last week.

A source familiar with Metro Pacific said the company wanted to 'sell a controlling stake in Fort Bonifacio'.

'There's no denying that it's a difficult market, but the company believes there is buying interest for the property, particularly in the Philippines,' the source said.

Philip Tulk, a Hong Kong-based investment analyst with Lehman Brothers, said Metro Pacific had about US$200 million in debts, about US$90 million of which were short-term loans owed to parent First Pacific.

'Metro Pacific is basically in a work-out situation and will need to pull out as much cash in as short a time as possible,' Mr Tulk said, adding that hard decisions would need to be made.

Mr Pascua said there was continued interest in certain properties within the Global City, including the 18.9-hectare Northern Central Business District and the five-hectare I-Village in the northeastern part of the development, for which negotiations were continuing.

'We have recently entered into a memorandum of understanding with a consortium of property developers for the sale of a 2.7 hectare residential block for a total consideration of 2.45 billion pesos [about HK$370.44 million],' Mr Pascua said.

In late 1995, Metro Pacific acquired through subsidiaries a controlling interest in Fort Bonifacio, hoping to turn it into Manila's prime financial and residential district. Its major partner was the Philippine Government.

However, the redevelopment project has faced numerous setbacks especially in the wake of the 1997 regional financial crisis.

After selling five years' worth of lot inventory in 1996, sales dried up and the company focused on below-street level infrastructure and delivering sold plots.

The Philippine Stock Exchange is demanding compensation on charges that the company has reneged on promises to build the exchange a new home at Fort Bonifacio to be ready by 2004.

The company was also forced to return a 64 hectare plot to the government last year, after repeated attempts by authorities to remove squatters failed.



Metro Pacific looking to sell troubled Manila-development stake to reduce US$200m debt