Selling Mimosa

LAST WEEK, the Clark Development Corp. was reported to have initiated the privatization of the Mimosa Leisure Estate.

CDC President-CEO Arthur P. Tugade disclosed there were “at least nine foreign and local companies” that signified their interest on MLE and participated in the pre-qualification of bidders. He, however, refused to name the firms, only assuring: “Doon sa siyam na nag-participate, halos kalahati locally-situated. At sa background nila, hindi naman maliliit, yun bang tinatawag nilang reputable at may character sa negosyo.”

No, the Tatalonian Toughie did not invoke any confidentiality clause in keeping the identities of the bidders sub rosa. It’s just one more instance of his wont to do the opposite of what he professes: transparency at the CDC.

We learned from sources though that among those who participated in the pre-bid were Robinsons, Filinvest, San Miguel Corp., two Korean firms, and one “client” of former CIAC head honcho Jose Victor “Chichos” Luciano.    

Anyways, Tugade noted: “Matagal nang pina-privatize ang Mimosa. Yung mga nakaraan, karamihan mga foreign companies,” even as he expressed hope that this time it would be for real: “Sa aming obserbasyon po… at sana tama yung obserbasyon namin baka matuloy na ho ang privatization, pero mahirap naman magsalita nang tapos kasi may proseso pa rin yan.”

Tugade’s caution-tempered optimism is well-founded.

There have been five attempts to privatize MLE since the CDC took control and management of the estate in 1998 – by virtue of a court resolution enforced with direct orders from President Estrada – following the non-payment of dues to the state-owned firm by its original owner Mondragon Leisure and Resorts Corp. of Cory Aquino’s Tourism Secretary Jose Antonio Gonzalez.

Win-lose

Twice, winning bids were announced only to be subsequently declared as failures: in 2006 with a Korean firm, and in 2008 with the William Gatchalian-owned hotel operator Waterfront Philippines Inc.

CDC rejected Waterfront’s request to extend the deadline for compliance with payment dues of: P450 million upfront payment for the going concern value (GCV), P160 million advance minimum guaranteed lease, another P160 million for the security deposit, the performance security equivalent to five percent of P50 million of the total investment commitment, and the balance of P52.5 million for GCV.

The demand of the Philippine Amusement and Gaming Corp. for Waterfront to first pay the arrears of MLRC, Mimosa’s previous operator “killed” the Gatchalian-led firm’s winning bid, claiming that it would put the financial viability of the whole project in jeopardy.

In July 2011, CDC President-CEO Felipe Antonio Remollo announced a “transparent” public bidding to privatize Mimosa to be scheduled soon as the terms of reference were finished, possibly the following month.

Said Remollo: “There have been five failed biddings before and we do not want another one, so we have to be careful, calculated, and transparent.” Sounds  much like Tugade now, eh?

Practical reasons

But that November, Remollo announced that no Mimosa privatization would take place, citing “practical reasons.”

“We were asking a P250-million yearly rental but no one took it,” according to  Remollo, even as he junked an earlier bid of some P160 million as yearly rental with a one-time payment of P1 billion.

Remollo’s “practical reasons” were MLE’s three major interests turning in profits: Holiday Inn Resort-Clark with P170 million, Mimosa Casino with P70 million, and  Mimosa Golf course with P20 million. Annually.   

“We will not bid it out (anymore) because the CDC will earn more and the one-time payment of P1 billion will be easily earned after a few years,” said Remollo. Instead he would just engage “experts in management” to handle the three major entities of the MLE, so they’d even earn “more and better.”

Yes, it can’t get any more practical than that. Thus, ended the quest for Mimosa privatization.

Until Tugade’s turn at the auction block. 

The terms of reference: P800-million minimum upfront payment, P5-billion commitment investment for the development of the estate, Mimosa Casino excluded in the deal, CDC to handle any labor dispute that may arise with the estate privatization.

Sounds just fine, looks even better than Remollo’s un-privatization practicality.

There’s just some concerns, three easily come to mind.

One. The banks with billion-peso exposure in Mimosa contracted at the time of Gonzalez. Aren’t some cases filed somewhere regarding this apparent default in payment?  

Two. Didn’t Gonzalez himself file some cases all the way to the Supreme Court seeking to regain Mimosa?

Three. The Mimosa golf club members – they who paid millions in shares, they who stuck it out with their course through thick and thin – totally left out in the terms of reference.

The banks and Gonzalez are well beyond my ken.

As for the Mimosa members, something I wrote here at the time the Korean firm won – and lost – the bid for the estate in 2006 has found relevance anew. Abangan ang susunod na kabanata. Tomorrow.