3 groups set to bid for Philphos

Pasar Holdings Inc., a Japanese fertilizer company and a group representing the interests of businessman Jose "Pepito" Alvarez are going to bid for the Philippine Phosphate Fertilizer Corp. (Philphos) when it is put on the auction block on Oct. 24, this year.

The Asset Privatization Trust (APT) revealed that these three companies participated in the pre-bidding conference held earlier this week in preparation for the public bidding that would privatize the country’s only phosphate fertilizer manufacturing company.

APT chief executive trustee Renato Valdecantos said all three companies were issued the official bid documents and were qualified to bid for government’s interest in Philphos represented by P38 billion worth of receivables.

Pasar Holdings owns the controlling interests in the Philippine Associated Smelting and Refining Corp. (Pasar) whose copper smelting facility is located adjacent to Philphos’ fertilizer manufacturing plant in Leyte.

Pasar’s natural waste product, specifically sulfuric acid, is used in the manufacture of phosphate fertilizers. Pasar is already one of Philphos’ main sources of sulfuric acid.

Led by Pasar chairman Carlos G. Dominguez Jr., Pasar Holdings is the company representing the consortium that successfully bid for Pasar when it was privatized last year.

According to Valdecantos, Philphos also attracted a Japanese company, E.Y. Corp. represented in the Philippines by a certain Takeshi Ikeda. The other company is a holding firm representing Jose Alvarez, who owns various businesses, including automotive manufacturing.

Faced with slim chances of being able to privatize the losing company, APT decided to sell its P38-billion worth of receivables in a desperate attempt to raise much-needed revenues.

APT hired Pryce Waterhouse as an independent financial advisor to repackage the privatization plan for Philphos and determine the actual value of the receivables.

These receivables, according to Valdecantos, are composed of Philphos’ plant and equipment that were used as collateral for the government-guaranteed loans. The buyer would end up owning these facilities.

According to Valdecantos, the original plan was to sell 50 percent of the company, but this would have to be cleared with the government of Nauru which owns 50 percent of Philphos.

"The government of Nauru has the right of first refusal," Valdecantos said. "If Nauru decides to exercise this right, then we cannot bid out the government’s 50 percent share, we can only sell the receivables."

Philphos is a joint venture entered in 1982 between the Philippine government, through the National Development Co. (NDC), and the Nauru government.

It operates Asia’s biggest and most modern phosphatic fertilizer plant complex in a 180-hectare site in Isabel, Leyte, producing over one million metric tons of high-quality fertilizers and fertilizer by-products.

If the government is unable to sell either its 50 percent interest or the receivables, Valdecantos said there would be no other option but to foreclose on Philphos’ plant and equipment since the company’s shares are now worthless after several years of operating completely in the red.

"We can’t dilly-dally the privatization because the security here is only the plant and it is deteriorating fast," Valdecantos said, adding that government has to bid the asset by October while there were still interested parties in the fertilizer industry.

Philphos supplies 70 percent of the local market for phosphate fertilizers and exports the rest to China and Vietnam. But it has not been able to generate profits due to heavy debts estimated at P40.8 billion owned to Japanese, Spanish and Belgian creditors.