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SM Prime hits Negros Occidental’s ‘illicit’ deal with ALI

Posted on July 18, 2011 09:51:13 PM [ BusinessWorld Online ]

SM PRIME Holdings, Inc. has hit a local government’s “illicit” deal with rival Ayala Land, Inc. (ALI) for the development of a 7.7-hectare state-owned lot in Negros Occidental.

In a statement, SM Prime questioned the negotiated sale of the property, saying it had filed an injunction petition against the province’s governor and members of the committee on awards and disposal of properties.

Ayala Land, a unit of conglomerate Ayala Corp., is looking to develop the property in Bacolod City in Negros Occidental into a mixed-use civic and commercial district at an estimated cost of P6 billion.

The government would sell the firm 3.66 hectares of the government property in Bacolod City, and lease 4.04 hectares for 50 years, Ayala Land said in a stock exchange filing.

But SM Prime, a unit of conglomerate SM Investments, questioned the negotiated sale and said its petition was still pending with a Bacolod regional trial court.

SM Prime said it had offered a “far more superior” bid for the property than what Ayala Land had submitted at a tender held on July 7.

The tender, however, was declared a failure after both firms purportedly submitted bids lower than the property’s appraised value, SM Prime said. It said the awards committee disclosed the appraised value, which served as the floor price, the day after.

“The alleged floor price or appraisal value was never disclosed during the public bidding, even after the sealed bids of both parties were opened and read aloud,” SM Prime counsel Vincent Patrick A. Bayhon said.

“The belated disclosure of the floor price the next day was a mere afterthought and done with bad faith to deliberately provide an excuse for the committee’s rejection of SM Prime’s bid,” he said.

Mr. Bayhon said the declaration of failure of bidding was a “sham” and “intended to pave the way for direct negotiations with its preferred party, ALI (Ayala Land).”

Ayala Land said it was not a party to SM Prime’s injunction petition, which was filed against the provincial government.

In a statement, Ayala Land said it followed all the bidding procedures and documentary requirements prescribed by provincial government.

“We are confident that the award will be sustained,” it said.

Shares in Ayala Land rose 0.74% while SM Prime fell 0.34% yesterday. -- Reuters with NJCM

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