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Alliance Global buys into Fil-Estate Land

Posted on 09:22 PM, December 22, 2010 [ BusinessWorld Online ]
ALLIANCE Global Group, Inc., the listed holding firm of property tycoon Andrew L. Tan, is set to acquire 50% of SobrepeƱa-led Fil-Estate Land, Inc. for P5 billion.
The buy-in is expected to fast-track the expansion of Alliance Global’s tourism projects outside Metro Manila as it aims to become the largest tourism player in the country.
“Alliance Global signed [Tuesday] an agreement with Fil-Estate Land under which Alliance Global will subscribe to five billion common shares of Fil-Estate Land for a total subscription price of P5 billion in cash,” the company told the local bourse.
“The subscription shares will be issued out of the P5-billion increase in authorized capital stock of Fil-Estate Land,” it added.
Fil-Estate Land, in a separate disclosure, said: “The shares shall entirely be issued from a planned P5-billion increase in the capital stock of Fil-Estate Land from P5 billion to P10 billion.”
Alliance Global will pay in two tranches. Full payment will be made after the Securities and Exchange Commission approves the increase in capital stock.
“We are acquiring a stake in Fil-Estate Land in line with Alliance Global’s strategy of investing in tourism projects outside of Metro Manila,” Alliance Global President Kingson U. Sian said in the disclosure.
“By forging a partnership with Fil-Estate Land, we will be able to develop more than 1,000 hectares of tourism-oriented communities in the country’s prime tourist spots such as Tagaytay, Nasugbu and Boracay,” Mr. Sian added.
Early this month, the conglomerate said it had allotted P7 billion for tourism ventures outside Manila. The company will sell as much as P6.5 billion in treasury shares to bankroll the plan.
“[The acquisition] will bolster our bid to make Alliance Global the biggest player in the Philippine tourism industry,” Mr. Sian said.
The eight-hectare Resorts World Manila complex in Pasay is the first integrated tourism development of Alliance Global under Travellers International Hotel Group, Inc., a joint venture with Genting Hong Kong Ltd., the third-largest cruise line operator in the world.
Total investment in Resorts World Manila from 2009 to 2012 had been estimated at $740 million, with $600 million for tourism development and $140 million for residential and retail projects. The plan is to open four hotels with a total 1,800 rooms catering to the budget, middle, and high-end segments.
Alliance Global also wants to develop tourism complexes at the 54-hectare old Iloilo airport and a 25-hectare property in Mactan, Cebu.
An analyst said the acquisition would benefit the publicly listed conglomerate.
“Definitely that is a good move because tourism is one of the primary industries that this government is pushing,” Astro C. del Castillo, managing director of brokerage firm First Grade Holdings, Inc., said in a phone interview yesterday.
“It will fast-track the expansion [of Alliance Global’s tourism business] by adding more land bank in its property holdings ... it also has the financial capability to put up more hotels and resorts,” Mr. del Castillo added.
Alliance Global -- whose nine-month net income rose by 63% to P5.39 billion from P3.31 billion in the same period last year -- is into property (Megaworld Corp.), liquor (Emperador Distillers, Inc.), and fastfood (Golden Arches Development Corp., the master franchise holder of McDonald’s in the Philippines).
Alliance Global expects profits to surge by 38% to P6.62 billion this year from P4.8 billion last year.
In August, Fil-Estate Land, the country’s top property developer before the 1997 Asian financial crisis, said it wanted to generate as much as P6 billion through loans and the sale of assets.
Fil-Estate Land, which is into horizontal development of residential subdivision lots; integrated residential, golf and other leisure-related properties; and vertical development of mixed-use towers, turned around to a P3.6-million profit in the October 2009 to June 2010 period.
It incurred a loss of P73 million in the same period the previous fiscal year, which ended in September.
Shares in Alliance Global jumped by P0.12 to close at P11.10 apiece yesterday while shares in Fil-Estate fell by one centavo to P0.92 each. -- Neil Jerome C. Morales
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