THE Asian financial crisis in 1997 broke dreams of businesses planning to grow via the equity market.
Many of these companies rode on the construction boom after the ouster of dictator Ferdinand E. Marcos.
One of them was what is known today as DMCI Holdings Inc.
DMCI—its name came from the acronym of the name of its founder, the late David M. Consunji—hatched a so-called initial public offering (IPO) story mainly to excite investors and goad them to bet their cash on DMCI’s shares.
Part of the so-called IPO story was to expand in allied businesses, such as in property development. The company then decided to take on a third of Universal Rightfield Property Holdings Inc. The plan reached its potential in 1996.
Universal Rightfield’s proposition was simple: to revolutionize the club-share experience. One club share of about P1 million can give investors access to multiple destinations, such as two business clubs, one city sports club, one beach club and two golf courses. Universal Rightfield sold 2,000 shares and then listed at the Philippine Stock Exchange (PSE) to further monetize the shares.
Universal Rightfield
UNIVERSAL Rightfield also started to acquire lands, located at the outskirts of central business districts (CBDs), such as a swamp in Taguig, where Acacia Homes now stands. The company also bought a former warehouse in Pioneer Street in Mandaluyong, where the headquarters of Globe Telecom Inc. is now.
“We trusted our partners that they [were] constructing these ‘destinations,’” DMCI Holdings CFO Herbert M. Consunji told the BusinessMirror. “But little did we know that, after the listing, our partners would run away, leaving us as the single biggest owner of the company.”
Among the multiple destinations that Universal Rightfield promised their owners, only two were fulfilled—a city club in Makati and a beach club in Puerto Galera in Mindoro.
“Up to now, there’s a stigma on that issue. When we sold those shares, people were riding on the name of ‘Consunji,’” he said.
A petition filed by DM Consunji Inc. was granted by the Regional Trial Court in Mandaluyong in 2004, allowing Universal Rightfield to suspend payments on a P1.39-billion debt.
Universal Rightfield was later on delisted from the PSE in 2011.
These two incidents became the one-two punch that nearly brought down DMCI on its knees.
Flat, down
FROM 1997 through 2003, DMCI’s income was almost flat to down.
During these years, the company had been liquefying its assets and those held by the Consunji family. DMCI asked money from the Consunjis when debts were about to fall due.
There were no debt defaults, however, since the family was paying for the borrowings from the sale of assets, Consunji said.
“We were trying to save the creditworthiness of the DMCI,” he added. “Credit was very tight and there were no preselling [of property] because no one was buying. And those that presell and decided to build cannot finish the project.”
According to Consunji, all the company’s tower cranes stopped.
“It was purely stand still,” he said. “No one wanted the construction of high-rise buildings” that time.
The only brave ones who pursued construction of their respective buildings by DMCI in 1997 include the Discovery Center also in Ortigas (February), Rockwell Center in Makati (April) and PCI Bank tower in Ortigas Center (June).
Aside from Universal Rightfield, DMCI also bought a stake in Asian Hospital, coal miner Semirara Mining and Subic Water from the proceeds of its IPO. AG&P was also purchased through this war chest.
AG&P reacts
ON Tuesday AG&P sent a statement in reaction to this story.
According to the company, it “is a 117-year-old Philippines-based infrastructure company with a long and successful history of serving the global gas, oil, power and
mining sectors.”
“In 2011, following the Asian financial crisis, AG&P was acquired by a group of investors who were looking to build next-generation energy assets,” the statement read. “Since then, AG&P has executed contracts worth over $1 billion” for liquefied natural gas (LNG) projects.
The company said these projects include the Gladstone LNG in Australia, Yamal LNG in the Arctic, Ichthys LNG off the northwest coast of Australia and the Goro Nickel Mine in New Caledonia.
According to AG&P, it enhanced its manpower division and is licensed by the Philippine government “to recruit, train and deploy local workers to overseas project sites.” “As a result, the company has become a consistent recipient of awards and recognition for its manpower services,” AG&P said. The company boasted it was awarded by the Department of Trade and Industry, “in recognition of its outstanding performance and contribution to the Philippines’s export sector through overseas manpower deployment services.”
AG&P said it “has the leading safety record in the construction industry, with 46 million consecutive safe man-hours without lost-time incident and 76 million safe man-hours with only a single incident” since 2011.
At the forefront
AG&P claims to be currently “at the forefront of the LNG infrastructure revolution providing gas or LNG to customers via integrated LNG-receiving terminals and their
supply chains.”
This year the company said it opened its offices in New Delhi, India, Indonesia, Singapore and the United States.
“AG&P’s business model is unique by bringing in one platform LNG design and engineering, innovative technology, manufacturing, project management, local marketing and operations,” the company said. “Through its terminal gateways, AG&P delivers LNG and natural gas to its customers for lower, pragmatic capital cost, thus simplifying and making commercially compelling the decision to switch energy sources for its customers.”
The company added it has recently been awarded two major contracts—an LNG import terminal at the port of Karaikal on the east coast of India worth $200 million; and a $980-million gas-to-power terminal project in South Sulawesi, Indonesia.
The company has a further nine LNG-related projects in various stages of development across Southeast Asia, AG&P said.
To be concluded
Image credits: Nonie Reyes