‘Nothing definite’ yet on IFC equity in PASAR

Media

Part of Business Day

Title: ‘Nothing definite’ yet on IFC equity in PASAR
Language: English
Source: Business Day XIV (99) July 15, 1980
Year: 1980
Subject: Investments -- Philippines; Philippine Associated Smelting and Refining Corp. (PASAR); International Finance Corp.
Rights
Fulltext: 'a'doer^^i P« Bank Your link to the international world of business DAILY • MANILA. PHILIPPINES TUESDAY, JULY 15, 1980 P1J0 IN METRO MANILA; Pl.50 IN PROVINCES • Accounting and Billing Clerks • Bookkeepers Collectors MAKATI 88 64-62 ^_MAN»LA 57-17-74 j VOL. XIV, NO. 99 * 16 PAGES New MOLE policy Skilled workers’ outflow curbed OPEC LEADER — Dr. Mana Saeed Al-Otaiba (left row, nearest President Marcos' desk). United Arab Emirates oil minister and last year's OPEC president, called on President Marcos yesterday. At lunch which Mr. Marcos hosted later, Al-Otaiba said the Organization of Petroleum Exporting Countries will increase to $20 billion its aid fund to help less developed countries like the Philippines. Others in photo are members of the visiting minister's party, including Ahmed M. Al-Rahma, Abbas Mohamed Abbas Zaki, Abdulla Al-Farisi, Idris Haboush, Nasser Al Jabari Khaled Al-Ashi and Joseph Al^heikh. (Story on page 8)' The Ministry of Labor and Em ployment no longer allows any skilled Filipino workers employed in certain “critical” industries to leave for employment overseas if his employer here does not approve of the departure. If the departing worker is unemployed, he must show proof he has been out of job for the past six months. Critical industries are those where there is a current need for limited skills and professions. They include the following: petrochemi cals, aviation, telecommunications, power, hotel (skilled workers), and agricultural research and tech nology. By RODRIGO V. ALVAREZ Reporter This new MOLE policy is in res ponse to protests persistently raised by business firms on the continuing exodus of skilled workers and pro fessionals, on whom they have in curred substantial costs to train. The list of critical industries was arrived at following a series of dia logues with various industry groups, the ministry and its overseas place ment-related bureaus, the Overseas Employment Development Board (OEDB) and the Bureau of Employ ment Services (BES). The government move supported a proposal of the Philippine As sociation of Flour Millers, Inc. (PAFMI), which sought OEDB’s assistance to require PAFMI clear ance to applications of skilled workers in the domestic flour mill ing industry to get jobs abroad. PAFMI president Felix K. Maramba, Jr., also executive vicepresident of Liberty Flour Mills, Inc., said in an interview that the domestic industry last year lost about 200 technical men, who left for Saudi Arabia. These technicians, who were mostly recruited by pri vate fee-charging agencies, were hired by employers of three newly constructed Saudi flour mills, Maramba explained. Pilipinas Shell seeks price hike of 30.81 ctvs per liter Pilipinas Shell Petroleum Corp, is asking the Board of Energy per mission to increase prices of its pet roleum products by an average price of 30.81 centavos per liter. Pilipinas Shell’s petition, formal ly filed yesterday, was the third to be received by the BOE. Mobil Oil Phils., Inc. and Caltex Phils., Inc. filed last week their res pective proposals for average price increases of 36.53 centavos and 20.609 centavos, respectively. Only two oil companies — iJj’aEic-Landoil Ervcv Corn, and-ihe government-owned Petrophil Corp oration — have not filed petitions. In its petition, Pilipinas Shell said it needs the price increase due to new increases in crude oil prices, chemicals, inland freight, refinery costs, and provisions for continuing increases in working capital and fixed asset requirements. Pilipinas Shell said the 30.81centavos increase it is asking for represents the following: ♦ an average of 26.98 centavos per liter in the new crude oil prices —. (Continued case 7) THE AVERAGE PRICE INCREASES PETITIONED BY 3 FIRMS SO FAR Mobil Oil........... P0.3653/lrter * Pilipinas Shell. . . .0.3081 Caltex..................0.20609 Rice price up 15 ctvs per kilo very soon By JULIE J. DE LA CRUZ Reporter EPZA’s Pena breaks silence on exporters’ complaints By ABRINO AYDINAN Reporter “The BEPZ (Bataan Export Pro cessing Zone) is functioning and functioning very well, ” Administra tor Teodoro Q. Pena of the Export Processing Zone Authority said in an interview with Business Day last week. He also indicated that the EPZA is working on the complaints of export firms in the zone. Corporate Developments • Despite equity deficit, Ford gets okay on P142-m CP issue The Securities and Exchange Commission yesterday gave the go-signal to Ford Philippines, Inc. to issue P142 million worth of commercial paper in the money market. (Commercial papers are securi ties issued by a company to finan cial institutions; they are actually a form of borrowings.) Ford’s authority to issue such instruments will last only two months from date of approval. How ever, it appears that the company will jump on the opportunity, since its resources are in need of re plenishment. Ford’s losses piled up through its years of participation in the Pro gressive Car Manufacturing Pro gram, amounting to P167.3 million as of last year, according to the financial statements submitted to the SEC. The parent compainy in the USA has injected about P193.67 million into the local, subsidiary. What remains of this capital infusion is P27.69 million as of last year (with Pl.3 million (Continued on page 7) The National Grains Authority (NGA) is expected to announce very soon a P0.15-increase on the of 1 lied rice, or been approved by President Marcos. A presidential letter of instructions to this effect will be issued soon. The new price ceiling was recom mended by an inter-agency commit tee composed of the ministries of trade, finance and agriculture, the NGA, Central Bank and the Natio nal Economic and Development Authority. Actually, the draft of the LOI was submitted to the President as early as April, along with the LOI (Continued on page 8) increasing the support price for palay from Pl.30 to Pl.40 per kilo. But the President delayed aneffective Ji y 1, to prevent public hoarding and panic-buying. The Cabinet standing committee headed by Finance Minister Cesar Virata has earlier approved in prin ciple an agriculture ministry recom mendation last April to raise the retail price of milled rice by at least P0.15 per kilo, along with the proposal to set the new support price for palay at Pl.40 per kilo. (Continued on page 7) ‘Nothing definite’ yet on IFC equity in PASAR Pena made the statement to “lead off” his “clarifica tion of the situation in the BEPZ.” (See Business Day, June 17, 30 & July 7). “There is a ten dency to blow up PENA facts” about the BEPZ, Pena said, although he recognized the exist ence of “defects” in the system. "There is no perfect system; just like the (living organism’s) body, there are always infirmities,” he said. (Continued on page 2) • 9 firms get BOI incentives The Board of Investments (BOI) last week approved the registration of Norphil Agro-Industrial Corp., an export producer of peanut oil and meal, under the Export In centives Act (Republic Act No. 6135). The project which is estimated to cost P48.5 million, will have an annual production capacity of 12,960 metric tons for peanut oil and 13,770 metric tons for peanut meal. The firm intends to export 100% of its peanut oil production and 70% of peanut meal output. The balance of 30% will be sold to local feedmillers. Target export markets are Japan, Europe and Southeast Asia. For the first five years of opera tions, the firm expects record sales of $66,027 million. Norphil has marketing tieup with Nippi Boeki Kabushiki Kaisha and Sumitomo Corp, of Japan. OTHER APPROVALS. Also approved under the Export Incen tives Act was the P12.278 million project of Mattel Philippines Inc., an export producer of toys (Barbie and Sunshine dolls), costume and . costume ensembles and other plastic toys. (Continued on page 2) The Philippine Associated Smelt ing and Refining Corp. (PASAR) has yet to complete -negotiations with the International Finance Corp., an affiliate of the World Bank, for a possible equity invest ment in the country’s $250-million copper smelter. In an interview with Business Day; Constante V. Ventura, PASAR president, said negotiations between PASAR and IFC are “still going on.” In effect, Ventura de nied reports that PASAR had al ready accepted IFC’s offer to put in 5% or $5 million of the $100-million equity of the copper smelter, one of the planned 11 major indus trial projects of the country. The PASAR official said an IFC inspection team was here a few days ago to assess the situation and verify the financial figures related to the project provided to them. The data gathered by the team will still be evaluated by IFC and “nothing is definite yet,” Ventura said. However, he added that IFC has indicated its willingness to invest $5 million in the project. EQUITY SHARING. Depending on how much equity will finally be put in by IFC and considering the 32% equity share already finalized with a Japanese consortium of Marubeni Corp., Sumitomo Corp, and C. Itoh, Ventura said equity sharing between the National Development Corp. (NDC) and the nine co owner copper mining firms will still be determined. Originally, only 30% of the pro ject’s equity was to be allowed for foreign investors and 70% to be shared by NDC and the nine mining (Continued on page 8) A Man-sized sandwiches, a mug of beer plus good company at the GAMBHNUS Page 8 Business Day Tuesday, July 15, 198C RP among possible beneficiaries Outflow of workers in critical OPEC to hike aid fund for LDCs industries restricted by gov’t The Organization of Petroleum Exporting Countries (OPEC) is increasing from $4 billion to $20 billion its aid fund for projects undertaken by less developed countries to meet their develop ment and energy needs, it was disclosed yesterday by Dr. Mana Saeed Al-Otaiba, oil minister of the United Arab Emirates and OPEC president last year, during a luncheon meeting with President Marcos. OPEC aims to further increase this development fund in the coming years to $100 billion, Otaiba added. This proposal will be taken up during the OPEC summit meeting to be held in November in Baghdad, Iraq. After the meeting with Otaiba and his delegation, President Mar cos told newsmen that the visit is a result of efforts of the Philip pines to establish contact with various sources of crude oil. He also said he has sent out several buying missions to the Middle East and South American countries to augment present oil supplies. The President said that during his meeting with Otaiba, he urged the OPEC to “work out solutions for the problems of countries that belong to the Third World, especially on the impact of OPEC policies on pricing.” Otaiba said OPEC, as an organ ization, is ready to “devote more contributions towards the Philip pines’ economic development.” He also demanded that indus trialized nations give a counter part contribution to the develop ment fund. OPEC FUND. The OPEC develop ment fund provides long-term dev elopment financing for develop ment projects of less developed nations on concessional terms. In some instances, it gives interestfree loans. The Philippines has availed of the OPEC development fund. Re cords show that as of June 30 this year, the Philippines had bor rowed $16.25 million from the fund for an irrigation project in Bukidnon ($3.5 million), the Cotabato-General Santos road ($8.25 million) and for fishpen development in Laguna Bay ($4.5 million). The Philippines also expects to get another $15 million from the OPEC fund which is administered by the Asian Development Bank (ADB). Half of this (or $7.5 mil lion) will be used to finance part of the construction of the Na tional Power Corporation’s trans mission and power transformer facilities in Mindanao and Negros island. The balance would be spent on infrastructure develop ment. IFC-PASAR talks still going on (Continued from page 1) firms, namely, Atlas Consolidated Mining and Development Corp., Philex Mining Corp., Marinduque Mining and Industrial Corp., Le panto Consolidated Mining Co., CDCP Mining Corp., Black Moun tain, Western Minolco, Marcopper Mining Corp, and Sabena Mining Corp. However, the smaller mining firms have indicated that they will be unable to come up with their required equity contribution. As this developed, the foreign investors had expressed their will ingness to put up part of the balanTo fill in the gap, PAS AR in vited IFC to invest in the project. Ventura emphasized that IFC’s participation is purely an invest ment undertaking. “There are no strings attached,” he said, debunk ing rumors that PASAR intends to acquire a loan from World Bank. THE1980 AIM-BMP PRESENTS Managerial Process & Practice This new development is of a progressive design and represents a material improvement in the Basic Management Programme. Its purpose is to develop and enhance those skills necessary for sound management, regardless of functional specialization. The Managerial Process & Practice course is a full-time programme of 22 days. It offers managerial development conscious companies an unparalleled opportunity to equip their employees with a comprehensive set of management skills, through one intensive, action-oriented programme. Specific subjects include control concepts, objective setting, organizational change, and financial analysis. ADMISSION REQUIREMENTS * The Programme is reserved for currently employed first-line to middle-level managers, functional specialists, staff officers, entrepreneurs and family firm executives. However, lesser positioned applicants will be admitted, provided their sponsoring companies make specific commitment to their advancement to these ranks upon completion of the programme. * Company sponsorship * Release of the Participant by the sponsoring company for the programme’s duration. * Proficiency in English N.B. Participants will be admitted on a first-come, first-served basis Board and lodging can be arranged by AIM. PROGRAMME CALENDAR The programme schedule for 1980 and 1981 is as follows: 21st BMP:MPP — August 25 — September 19 22nd BMP:MPP — November 17 — December 12 23rd BMP:MPP — February 16 — March 13 24th BMP:MPP — June 1 — June 26 DEADLINE FOR 21st BMP:MPP APPLICATIONS & RESERVATION FEE - July 28, 1980 ASIAN INSTITUTE OF MANAGEMENT Paseo de Roxas, Makati, Metro Manila - 3117 Philippines MCC P.O. Box 898 TEL. 87-40-11 TELEX: 63778 AIM PN *03616: AIMANILA (Continued from page 1) “If this trend con tinues, we may soon suffer a lack of suffi ciently trained personnel to run our mills, and may eventually affect domes tic flour production,” Maramba said. “We are not against our technical men wanting to improve their own selves econo mically. . . but govern ment should adopt pre ventive measures so that the flour milling industry will not be unduly hamp ered.” A ffected local flour millers were General Mill ing, Republic Flour Mills, Pacific Flour Mills, Universal Robina Corp., Wellington Flour, Pills bury Flour and Liberty Flour. Most employes who left these firms, Maramba said, had been actively connected with these companies for about 10-15 years. CE RTIFICATION. Under the MOLE system, the OEDB and the BES will require prospective overseas workers to secure a “certification of no objection” from their -present employers. This requirement will give em ployers time to look for replacements in jobs vacated by workers who resign and leave for abroad. Observers expressed apprehensions that the ministry’s policy violates the constitutional right of Filipinos to seek their own means of livelihood. Sought for comment, OEDB executive director Salvador P. Bigay said that the MOLE policy is premised on a “national need,” and the principle that the present man power export program should not be adverse to local industries. Although manpower ex portation is a major con tributor to the country’s total foreign exchange earnings, the overseas labor program must not negatively affect viability of local industries, he said. OTHER INDUSTRIES. Bigay said the MOLE policy will apply only to the identified critical in dustries, where replace ments for lost skills are relatively difficult and costly to acquire. He said, however, that the list of critical industries may be expanded by the labor ministry if other non-listed industries file complaints on the “brain and brawn drain. ” Bigay said the present brain and brawn drain problem has become “in evitable” inasmuch as the country has limited re sources and capabilities, compared to Middle East and other western coun tries. Apparently, he noted, Filipino industries could hardly meet the wage scales and other employment benefits offered by foreign em ployers, as evidenced by the increasing outflow of skilled labor. Among the other sectors affected by the loss of skilled workers are the transport and construction industries. Recently, the Bus Operators Association of the Philippines said that bus companies have been bugged by the problem that drivers and mecha nics have left the country for better work opportu nities. Also, a construction firm belonging to the Philippine Contractors Association has reported that it has been losing 50 to 100 workers a year, pirated by foreign com panies. As a result, the PCA said that Filipino contractors who bid in international construct ion contracts often end up competing against for eign companies employ ing skilled Filipino workPurchase of firm’s own shares of stock By MAT DEFENSOR A corporation, under Sec tion 16 of the Corporation Law, is allowed to issue shares of stocks in exchange for cash or property. When a corporation purchases its own shares by paying cash or pro perty, the corporation na turally reduces its financial capability. Situations being avoided when a corporation reacquires its own shares through cash purchase are the impairment of the rights, of creditors and the undue advan tage accruing to some stockholders at the ex pense of the remainder. Such situationscan hap pen when a corporation under financial trouble purchases the shares of stocks of favored stock holders to save their investments, leaving little or nothing to the creditors and remaining stock holders. Under the pre* ■■■■■■■■■ilMHMMB sent law, the power of a corporation to Rncinace reacquire stocks is DU3lllv33 expressly granted « .1 I—... to the corporation Ct 1116 IdW only when the appraisal right is given to dissenting stockholders (under sections 17-1/2, 18 and 28-1/2) and- in delinquency sales when there is no bidder for stocks for sale (Section 44). Minus those instances, a corporation’s right to purchase its own shares, though not prohibited, is not expressly authorized. Hence, in the case of Steenbert v. Velasco (10 Phil. 953), the Sup reme Court, knowing that the corporation is insolvent and about to be dissolved, denied the corporation’s right to purchase its own shares by invoking the doctrine that the directors of a corporation must act in good faith in preserving the assets of the corporation. However, the Securities and Exchange Com mission in a letter-opinion dated April 5, 1965, and again in a letter-opinion dated Feb. 1, 1979 addressed to Philippine National Bank reiterated the general rule that in the absence of prohibi tion, corporations have the implied power to pur chase their own shares of stock subject to the conditions that: 1. capital is not impaired; 2. a legitimate corporate object is advanced; 3. the condition of corporate affairs warrants it; 4. the transaction is designed and carried out in good faith; 5. it is intended and there results no undue advantage to a few favored stockholders at the expense of other stockholders; and 6. the rights of the creditors are not jeopar dized. Under Section 9 of the proposed code, which hopefully is now a law, a corporation has the power to purchase or reacquire its own shares subject to the limitations that the purchase must be for a legitimate corporate purpose and the corporation has an unrestricted earned surplus. The code enumerates instances considered as legi timate corporate purposes. These are: 1. “To eliminate fractional shares arising out of the declaration to stock dividends; 2. “To collect or compromise an indebtedness to the corporation, arising out of unpaid subs cription in a delinquency sale and to purchase delinquent shares sold during said sale; 3. “To pay dissenting or withdrawing stock holders entitled to payment for their shares under the provisions of this code; 4. “To redeem or retire redeemable or pre ferred shares issued by the corporation at a price not to exceed the redemption or issued value thereof.” Those instances as enumerated above are re cognized by the code as not exclusive. The status of reacquired shares will depend on the purpose of the corporation. If stocks are re acquired under Sections 17-1/2, 18, 28-1/2 and 44 of the Corporation Law or simply by re demption in case of redeemable shares, said shares have the effect of being treated as treasury shares and shall remain issued and outstanding. If shares are reacquired for the purpose of with drawing them for circulation, such shares may be reverted to the status of authorized but unissued shares. There are enough safeguards against the im pairment of the rights of stockholders and cre ditors in both the present law and the proposed code. The guidelines set by the Securities and Exchange Commission took care of what is lack ing under the present law.
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