^

Business

Chapter 11

EYES WIDE OPEN - Iris Gonzales - The Philippine Star

There were three birthday cakes on the table for taipan Lucio Tan. He was smiling and he looked healthy, one wouldn’t think he had been hospitalized for COVID-19 in April. This was according to a photograph I saw, which a source said was taken during a family gathering for his 87th birthday last month.

Aside from the cakes, a fitting gift for the taipan came days after his birthday – the breakthrough that his four-star flag carrier, Philippine Airlines  (PAL) finally reached on September 3: A Chapter 11 filing in the United States Bankruptcy Court in the Southern District of New York.

The filing is essentially a lender-assisted restructuring plan that would enable PAL to recover from the devastating impact of the global health pandemic.

The company aims to cut $2 billion in borrowings. It will also get $505 million in equity and debt financing from its majority shareholder, as well as $150 million of debt financing from new investors to facilitate recovery.

“We welcome this major breakthrough, an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines’ vital global air links to the world. We are grateful to our lenders, aviation partners, and other creditors for supporting the plan which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term,” said Tan, chairman and CEO of PAL.

A long time coming

I’ve been writing about the Chapter 11 filing as early as December last year, but it didn’t happen back then.

In a virtual press conference on Monday, I asked PAL president and COO Gilbert Santa Maria, who is currently in New York for the proceedings, why it took so long.

He said it’s because negotiations with stakeholders and their respective legal teams, took time.

Negotiations must have been intense, I imagine. That, plus the other important part of the deal – arriving at terms acceptable to El Kapitan, specifically on how much he was willing to go to save his beleaguered carrier.

But it’s finally here now and it bodes well for PAL because a Chapter 11 filing in New York is widely respected globally.

Of course, we have yet to see if the airline will successfully exit this episode in its history.

I hope it does, for the sake of the country’s airline industry and for the thousands of PAL employees who lost their jobs because of the company’s troubles. Their sacrifices and pain must not be in vain.

Santa Maria is appropriately optimistic about the plan. “Following the recent celebration of our 80th anniversary, we move forward with renewed confidence as today’s actions enable us to continue serving our customers and the Philippine economy long into the future.”

While there is no fool-proof plan, he said, “I don’t anticipate anything other than an asteroid hitting Manhattan, for example, stopping us from exiting.”

Midnight in New York

It was almost midnight in New York when the press conference in Manila ended, but unlike Woody Allen’s Midnight in Paris, it’s certainly not a vacation for Santa Maria and PAL senior vice president and CFO Nilo Rodriguez, and they won’t be slipping into a different world at midnight, unlike in Allen’s fantasy movie.

Instead, they will need all the time to prepare as the first hearing is set on Thursday, Sept. 9 at 10:30 a.m., New York time.

From drugs to cigarettes, smuggling continues

From illegal drugs to cigarettes and everything in between, smuggled goods continue to find their way into the country, wreaking havoc on consumers and legitimate businesses alike, as well as leaving a huge dent on state coffers.

The Bureau of Customs seized P20 billion worth of smuggled goods from January to August this year or P15 billion worth of counterfeit goods; P1.8 billion worth of illegal drugs and P1.2 billion worth of illicit cigarettes.

Seven out of 10 cigarette packs are smuggled

In Mindanao, an industry survey among sari-sari stores revealed that illicit cigarettes have now overtaken the sale of legal brands. Seven out of 10 cigarette packs sold in small retail outlets are illicit or counterfeit.

The illicit trade is also flourishing in Subic, sources in the BOC said, with six major seizures of illegal tobacco shipments recorded since January.

Some of the illicit goods came from transshipment ships docking at Subic supposedly for just a pitstop.

Smugglers seem to be exploiting a Customs order which extended the number of days transshipment vessels can dock at the Subic Freeport – from five to 14 days. Syndicates are using the extended port stay to bring in their illegal goods thru Subic under the cover of transshipment operations.

Agricultural products, electronics parts, used clothing, and even personal protective equipment, as well as other medical supplies, are also being smuggled into the country, said BOC Commissioner Rey Leonardo Guerrero.

Indeed, the cat-and-mouse game between smugglers and authorities continues. But what this really tells us is that smuggling syndicates continue to thrive and this can only mean they have backers from high places.

 

 

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com

PAL

Philstar
  • Latest
  • Trending
Latest
Recommended
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with