Alvarez group won’t up Philphos bid

Businessman Jose Ch. Alvarez is no longer willing to raise his bid for government’s shares in Philippine Phosphate Fertilizer Corp. (Philphos) and has asked the Asset Privatization Trust (APT) to return his P250-million cash deposit before the scheduled Nov. 22 re-bid.

When the APT conducts the re-bid for the Philphos shares, Alvarez said his consortium would still bid P2.5 billion, the same amount they offered when the shares were first put on the auction block on Oct. 25, 2000.

"It’s all the business could afford," Alvarez said. "I am no longer going to raise this bid. If I am the only bidder I might bid even lower."
No matter what the turnout, however, Alvarez said the APT should still return his cash deposit.

"If there will be a new bid, the whole process starts over and everyone starts fresh," Alvarez said. "There is no reason for APT not to return the P250 million."

He stressed, however, said that his group will have no trouble raising the P2.5 billion. "We are not raising the bid because that is what the business itself is worth under the conditions in the industry," he said.
According to Alvarez, the peso-dollar exchange rate had driven raw material prices to prohibitive levels. In contrast, the local prices of nitrogen/phosphate/potassium (NPK) fertilizers cannot be adjusted since the farmers’ buying capacity has not improved.

"There is also the inflow of cheap fertilizers from global players like Korea, China and Russia to consider," he said.

"Generally, business is so bad that our bidding for [the government shares] is a big gamble," he said. "It is our firm belief that this bid is reasonable, considering that return on investments is not certain in the next 7.5 years."

Philphos’ prospects have also become bleaker as Vietnam, its primary export market, gears for the construction of its own phosphate fertilizer plant.

Sources from the Department of Trade and Industry (DTI) had intimated to reporters that even when it is privatized, Philphos would be in "big trouble" because it would soon lose its export market.

Philphos 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.

Philphos exports 70 percent of its total production mostly to Asian countries. Vietnam is the biggest single buyer of Philphos fertilizer outside of the Philippines, accounting for 40 percent of its production, equivalent to 400,000 its other export markets are Malaysia, Thailand and other Asian countries.