A visibly overjoyed, Finance Secretary Jose Isidro Camacho announced late Wednesday night that Alvarez made the payment on schedule as his letters of credit matured.
"It came in, that’s going to help us a lot," Camacho said.
Philphos was the last of the government’s successful privatization efforts as the new owners managed to turn the company around and maximize its monopoly on phosphatic fertilizers in the country and maintain its significant share of the regional market.
Apart from Philphos, the only other privatized company that has not resorted to asking for a government bailout is the Philippine Associated Smelting and Refining Co. (PASAR), a copper processing facility now headed by former agriculture secretary and Philippine Airlines president Carlos G. Dominguez.
Other privatized companies have not been so lucky, spurring questions on whether the government might have to ultimately take over some of these companies as it has done with the Lopez-controlled Maynilad Water Services, which gave up its concession area.
According to Camacho, however, the Maynilad incident was an isolated one, coming in close succession to the crisis that rocked another Lopez-controlled company, the Manila Electric Co. (Meralco).
"It should not reflect on the whole policy of privatizing certain industries," Camacho said.
Philphos was set up on June 6, 1980 as a joint venture of the National Development Co., the Philippine government’s corporate investment arm, and the government of the Republic of Nauru.
The company is the country’s biggest manufacturer of phosphatic fertilizer, accounting for about 75 percent of the local market. It is also reputed to be the biggest phosphatic fertilizer manufacturer in Asia, using phosphate imported from Nauru.
After several failed bids and a lengthy negotiation with the then Asset Privatization Trust, Alvarez was able to buy the Philphos shares for P3.6 billion after making his original P2.5 billion bid which was way below the government’s P4.2-billion indicative price.
The Committee on Privatization was able to persuade Alvarez to pay P2 billion up front and then settle the rest of the amount in two years.
Alvarez is the incumbent chairman of Philphos, representing the government of Nauru which still owns 50 percent of the company. Although he made his bid as part of the consortium, the businessman is known to be making the bid on behalf of Nauru.
On his own, Alvarez owns several other businesses including Columbian Motors which manufactures cars and buses. Until recently, Alvarez assembled the Lynx car models for Ford Motor Co. but this has since been taken over by Ford Philippines.