PAL, PAL Holdings boards quit

Business Mirror
April 18, 2012

A week after San Miguel Corp.’s (SMC) investment in the flag carrier was made public, the board members of Philippine Airlines (PAL) and its holding company PAL Holdings Inc. submitted their courtesy resignations.

“We agreed that it was just right to do so, given the new management that will take over. Almost all from the senior management level submitted courtesy resignations last week,” said a board member.  According to the official, PAL has 15 board members and 11 for PAL Holdings.

PAL Holdings is the holding company that controls majority shares of the flag carrier. The 11-man board consists of Lucio C. Tan, Harry C. Tan, Jaime J. Bautista, Lucio K. Tan Jr., Michael G. Tan, Domingo T. Chua, Wilson T. Young, Juanita Tan Lee, and independent directors Antonino L. Alindogan Jr., Enrique O. Cheng and Johnip G. Cua.

The list of PAL board members posted on its web site includes the following: Alindogan Jr., Cheng, Alberto D. Lina and Gregorio T. Yu as independent directors. Other members are Charles C. Chante, Joseph T. Chua, Estelito P. Mendoza, Cesar N. Santos, Washington SyCip,  Lucio K. Tan Jr. and Michael G. Tan.

Lucio C. Tan is the chairman and chief executive officer (CEO) of both PAL and PAL Holdings, while Bautista sits as the president for both.

Other PAL officers include Harry Tan as vice chairman and treasurer and Henry So Uy as the deputy CEO.

PAL Holdings CFO, meanwhile, is Susan Tcheng-Lee while the corporate secretary is Cecilia Pesayco.

Under the investments agreements signed by SMC on April 3 with business taipan Lucio C. Tan, the same official disclosed that the concurrent PAL president and chief financial officer (CFO) would be replaced by people from SMC; the concurrent chairman and treasurer of the flag carrier will be retained. 

There is no word yet if there would be further changes within the company. “There is no board meeting yet. What is clear is that only the president and CFO positions would have to be vacated,” said another official. It was not clear if SMC would replace the president and CFO of Air Philippines Corp. as well.

The investment agreements would result in the issuance of new shares to the diversified conglomerate for a minority stake in PAL and low-cost partner Air Philippines, which operates Airphil Express.

Under the agreements, Trustmark Holdings Corp. (Trustmark) and Zuma Holdings and Management Corp. (Zuma), the holding companies of PAL and Airphil would issue new shares to San Miguel Equity Investments Inc. (SMEII), a wholly-owned subsidiary of SMC.

Trustmark and Zuma are majority owned by Tan.

SMC, in a disclosure yesterday, said SMEII subscribed to newly issued shares in Trustmark and Zuma, and such subscriptions correspond to a 49-percent equity interest in Trustmark and Zuma.

It added that SMEII would not have a direct equity interest in PAL Holdings; rather it will have resulting proportionate interest in PAL Holdings and PAL, as well as in Airphil, to the extent of its investment in Trustmark and Zuma, respectively.

SMC’s investment in this deal is worth $500 million. “The investment was based on the enterprise value of PAL and Airphil taking into account a discounted cash-flow analysis of the ongoing business of PAL and Airphil.”

As previously disclosed, the investment by SMC, through SMEII, provides an opportunity to diversify into an industry, which has synergies with the company’s existing businesses. “Such investment will likewise augment and supplement the ongoing enhancement of the operations of in PAL and Airphil, and the implementation of the fleet modernization programs with the end view of enhancing the efficiency, competitiveness and profitability of PAL and Airphil.