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Ayala Land plea on reclamation project rejected

Posted on October 31, 2013 10:18:16 PM [ BusinessWorld Online ]

THE PASAY CITY government has rejected the request of Ayala Land, Inc. for more time to prepare its counterproposal to SM Group’s P54.5-million reclamation plan.

In a letter to Ayala Land Corporate Secretary Solomon M. Hermosura on Oct. 29, city legal officer Severino C. Madrona, Jr. said his office could not grant the 60-day extension requested by the company from the Nov. 4 deadline. The solicitation notice for competing tenders was published on Oct. 1.

“… [W]e cannot grant your request for extension of time to submit counterproposal without exposing ourselves to charges of violating or bending the rules to favor your company,” Mr. Madrona said, citing the 2008 National Economic and Development Authority Joint Venture guidelines in justifying the decision.

In the same letter, Mr. Madrona also clarified that the bid document fee was worth P150,000 and not P5 million, an amount Ayala Land contested.

The decision left Ayala Land with only four days to submit a counterproposal.

Ayala Land Chief Operating Officer Bernard Vincent O. Dy, in a briefing yesterday in Makati City, said: “We are reviewing all our options.”

He said Ayala Land might ask the city government for reconsideration or seek court intervention on Monday. “All options are possible,” Mr. Dy said.

Asked if the company will nevertheless submit a proposal on Monday, in case Pasay City denies its appeal, Ana Bautista-Dy, vice-president for land bank management, in the same briefing replied: “We will not submit for the sake of submitting.”

Ayala Land’s Mr. Hermosura on Oct. 23 wrote Pasay City Mayor Antonio G. Calixto that Ayala Land was keen on challenging SM Land, Inc.’s unsolicited proposal for a joint venture with the city government “to undertake the raw land reclamation and horizontal development of 300 hectares.”

SM Land, in its proposal, said it would complete the project within seven years from issuance of the notice to proceed. SM Land will also reserve 153 hectares or 51% of the area for the Pasay City government or the Philippine Reclamation Authority.

EXPERIENCE NEEDED
Mr. Hermosura, in his letter to Mr. Calixto, questioned bidding parameters set by Pasay City’s public-private partnership office, which required interested entities to have undertaken a similar reclamation project with an area measuring at least 120 hectares, “preferably within the Manila Bay area,” and to have at least P50 billion in capital.

In his response, Mr. Madrona said the reclamation experience requirement “is intended to ensure that the proponent… has sufficient relevant experience to undertake the 300-hectare reclamation project.”

In a letter to Mr. Madrona on Oct. 29, SM Land Senior Vice-President David L. Rafael said his company has experience in reclamation.

According to Mr. Rafael, SM Land, formerly named Shoemart, Inc., in 1994 entered a joint venture agreement with the Public Estates Authority -- now Philippine Reclamation Authority -- for reclamation of a 141-hectare property known as Cental Business Park 1 Island, the location of SM Group’s Mall of Asia Complex.

The city government furnished SM Land a copy of Ayala Land’s letter “in the interest of fair play.” SM Group yesterday refused to comment.

Ayala Land ended the first half with a net income of P6.62 billion, up 23.28% from P5.37 billion a year ago. Revenues rose 35.67% to P36.63 billion from P27.0 billion, while cost and expenses increased by 39.00% to P27.51 billion from P19.79 billion.

SM Land, meanwhile, is a privately held company of the Sy family that early this month merged with SM Prime Holdings, Inc. as part of a consolidation effort that will leave the listed mall developer as surviving entity. -- Cliff Harvey C. Venzon      
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