Baguio Gold changes name to PAL Holdings, hikes capital stock

BY MARICEL E. ESTAVILLO, Reporter/BusinessWorld The Securities and Exchange Commission (SEC) approved last week the increase in authorized capital stock of Baguio Gold Holdings Corp. and the change in corporate name to PAL Holdings, Inc. Baguio Gold, a listed firm controlled by beer and tobacco magnate Lucio Tan, told the Philippine Stock Exchange (PSE) Monday that it has secured SEC’s nod to hike its authorized capital stock to P20 billion from P400 million divided into 20 billion shares with a par value of P1 per share. SEC’s approval of Baguio Gold’s change of corporate name to PAL Holdings is seen by the market as a step closer towards the eventual listing of Philippine Airlines, Inc. (PAL), particularly by way of the much-hyped backdoor listing. Both PAL and PAL Holdings are controlled by Mr. Tan. Backdoor listing in stock parlance is an option for private companies to take over publicly held companies to tap the local equities market and generate additional capitalization. PAL President Jaime J. Bautista, who is also the president of Baguio Gold, declined comment on the possibility of PAL taking backdoor listing when asked Monday. He clarified in an interview last September that going public remains an option for PAL in the future. The airline, which is still under a debt restructuring program, would wait until 2008 to record three years of continuous profitability, a prerequisite to listing on the local bourse. It was during that same interview when Mr. Bautista had categorically denied the talk that the flag carrier is pursuing a backdoor listing. But for analysts, the change in corporate name to PAL Holdings only signals a forthcoming listing for PAL and further integration of Tan-owned companies, particularly those related to the aviation business. "It has been discounted already; people are well aware of that [back-door listing despite PAL’s denial. The market is looking forward to the eventual listing of PAL and it could be backdoor," one analyst said. PAL Holdings, the analyst described, could be used as the holding company for aviation related businesses of Mr. Tan and even extending its scope to future projects such as those related to tourism. Mr. Bautista earlier explained the thrust for Baguio Gold going forward is to focus all its investment activities solely on the area of aviation. Formerly owned by businessman Benjamin Bitanga, the holding firm Baguio Gold was previously called Baguio Gold Mining Co. with diversified interests. At present, Baguio Gold also has a minority stake in another Tan-owned aviation service firm, MacroAsia Corp. "PAL being the country’s largest airline is a welcome addition in the market. It doesn’t really matter how PAL will go about the listing as long as it gets listed," another analyst said. "And on the possibility of MacroAsia [also a listed company] integrating with PAL Holdings, that is also possible. With PAL Holdings, this creates an entirely new sector at the stock exchange," the same analyst added. At present, the transport segment at the stock exchange is dominated by shipping companies. "Compared to shipping companies, the airline business is appearing to be a more lucrative investment," the analyst said. Last year, Baguio Gold bought the six holding firms of PAL, a move earlier described as part of the "corporate restructuring" thrust of the Lucio Tan Group of Companies. These six companies, which collectively control 81.57% of the flag carrier, are: POL Holdings, Inc., Cube Factor Holdings, Inc., Ascot Holdings, Inc., Sierra Holdings and Equities, Inc., Network Holding and Equities, Inc., and Maxell Holding Corp. FINANCIALS According to publicly available figures, Baguio Holdings has trimmed its net loss by 96.38% to P312,501 during the quarter ending June last year from P8.64 million in the same period in 2005. While revenues, which solely come from interest income, dipped 7.66% to P627,466, the listed company posted a 91.25% drop in expenses to P814,474 from P9.31 million. The company had no significant operations during the past three years. Funds are currently invested in short-term money market placements and available-for-sale instruments. Due to its limited operations, revenues come mainly from interest earned on short-term cash placements, realization of changes in fair of available-for-sale investments and dividend income. Baguio Holdings was originally a mining firm before it was converted into a holdings firm in 1996. The company is a 69.16%-owned subsidiary of Trustmark Holdings Corp. (Trustmark) over which Mr. Tan has voting power. — with Bernardette S. Sto. Domingo