MANILA, Philippines - Key executives of Philippine Airlines (PAL) and its parent firm PAL Holdings have reportedly tendered their resignation last week after San Miguel Corp. (SMC) acquired a significant stake in Asia’s oldest airline.
A source said the boards of directors of PAL Holdings and PAL submitted their courtesy resignation to give SMC a free hand in organizing a new management team.
Jaime Bautista, president of PAL and director of PAL Holdings, also reportedly tendered his resignation.
Earlier, SMC president Ramon Ang told The STAR that he will take over as president of PAL.
PAL sources, however, said the new board of both PAL and PAL Holdings have yet to meet, after which they will elect the new company president.
“As of now, we cannot confirm nor deny rumors about these resignations because we have yet to see their resignation papers. Right now, it is still business as usual, with the management team still running PAL,” the source said. In fact, as of press time, PAL chairman Lucio Tan was in a management meeting for updates on operations.
SMC acquired not only a minority stake in PAL, but also management control of the country’s flag carrier.
Ang was earlier invited by Tan to participate in the carrier’s refleeting program, which Ang said would cost between $500 million to $1 billion.
PAL’s board members include Charles C. Chante, Joseph T. Chua, Estelito P. Mendoza, Cesar N. Santos, Washington SyCip, Lucio K. Tan Jr. , and Michael G. Tan. The independent directors are Antonio Alindogan Jr., Enrique Cheng, Alberto D. Lina and Gregorio T. Yu .
The directors of PAL Holdings, meanwhile, include Tan Jr., Cheng, Alindogan, Michael Tan, Harry Tan, Wilson Young, Domingo Chua, Juanita Tan Lee, and Johnip Cua.
Through wholly-owned subsidiary San Miguel Equity Investments Inc. (SMEII), SMC entered into investment agreements with Trustmark Holdings Corp. and Zuma Holdings and Management Corp., giving the former a 49 percent stake in PAL and Air Philippines Express for $500 million.
Trustmark and Zuma are both majority owned by Lucio Tan, who is also chairman of PAL and PAL Holdings.
In a disclosure to the Philippine Stock Exchange, San Miguel said its unit SMEII will not have a direct equity interest in PAL Holdings nor in PAL, the operating company.
“SMEII shall have resulting proportionate interests in PAL Holdings, PAL, as well as in Airphil, to the extent of its investment in Trustmark and Zuma, respectively,” SMC said.
“The investment of the company 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,” the conglomerate added.
SMC also said there were no conditions precedent to the transaction.