Miyazawa Fund Eyed to Keep Pal Afloat

Today

Tuesday, December 15, 1998

IN the absence of a strategic partner for Philippine Airlines, the administration is considering corporate debt restructuring as a way to revive it, a ranking Cabinet member said yesterday.

The new tack would involve offering shares to the public, Finance Secretary Edgardo Espiritu said in a news briefing at the airport shortly after President Estrada left for Vietnam.

The government will tap into the Miyazawa fund to fund the restructuring scheme. “This has been done in Thailand and Indonesia and we are looking at the possibilities of making the restructuring of PAL a part of the Miyazawa initiative.”

Espiritu added that the government will allot $150 million from the Miyazawa fund, a $30-billion package offered by Japan to Southeast Asian countries badly hit by the financial crisis to spur development and hasten recovery of these countries.

Key industries have priority in the availment of the fund, such as banking, housing, agriculture and exports, but Espiritu said that financial advisers have told them that corporate restructuring of an ailing flag carrier is covered by the Miyazawa initiative.

He said the loan would have to be negotiated with the Japanese Export-Import Bank and the Overseas Economic Cooperation Fund by the PAL recovery task force in cooperation with the Securities and Exchange Commission and PAL management.

Espiritu made it clear, however, that Estrada still prefer that PAL turn over management to a strategic partner. “This is the direct objective.”

He added that all talks with Hong Kong-based Cathay Pacific remain uncertain; also with Singapore Airlines. The World Bank subsidiary IFC is also interested in buying into PAL.

Espiritu said that the government would not wait, however, for any foreign investor to come in before it acts to save the flag carrier, saying the administration’s moves are now all geared toward restructuring PAL’s outstanding loans of $2.2 billion.

He added that the proposals to have overseas Filipinos patronize the carrier is an integrated approach that was suggested by the task force before.

“To make PAL viable you need to involve several government agencies because of a lot of issuances under the previous government when PAL was put against a huge disadvantage as against competitor airlines in the Asean market.” Espiritu said. R. Mercene, E. dela Cruz