Spurred by BID of SM: Gokongwei also keen on South Road Properties

By Wenna A. Berondo
The Freeman 03/09/2007

Cebu City's sprawling but controversial South Road Properties are not as dead in the water after all as some would like to believe.

It now appears that no less than two of the country's taipans of industry, with two of the country's biggest conglomerates behind them, are locked in a subtle war to gain control of the 295-hectare property.




Yesterday, Mayor Tomas Osmeña announced that John Gokongwei Jr., founder and chairman of JG Summit Holdings, called him up to express his interest in buying and developing a huge chunk of the property.

" I have good news. Yesterday, I had a phone call from Big J, " Osmeña told reporters, barely able to contain his excitement

He said Gokongwei told him he got interested in the property after reading in the news a few days ago that SM Prime Holdings of Henry Sy is also interested in a major acquisition at SRP.

Aside from other businesses, both Gokongwei and Sy are into retailing, mall operations and property development.

' I read in the newspapers that SM will buy SRP. I want to buy it also. I have money, " Osmeña quoted Gokongwei as saying.

But unlike SM, which reportedly plans to buy the entire property, Gokongwei only wants to buy 78 hectares and is sending a team of technical people to negotiate with the city government on how to work out the purchase.

The mayor did not give additional details concerning his conversation with Gokongwei but expressed excitement over the new development.

A source close to Gokongwei confirmed that the taipan, who built his fortune peddling goods on a bike around Cebu, confirmed the interest to buy into the SRP was real but that details were yet unavailable.

JG Summit is the parent company of a vast empire that includes airline, mall and hotel operations, banking, food manufacturing, telecommunications, petrochemicals, power generation, publishing, real estate and property development, and textiles.

Last week, it was Osmeña who also announced that SM is currently negotiating with the city government to buy the entire SRP and assume the outstanding debt obligations the city incurred in financing the project.

Osmeña said he has not yet decided on whether or not he would accept the proposal of SM for fear it would build a mall at the SRP. The mayor said a mall at SRP would eventually kill small department stores in the city.

In fact, he said, SM proposed two years ago to put up a mall at the SRP but that he turned it down because a mall is " a low low priority " business at the property.

SM is also among the country's biggest conglomerates, occupying a dominant position in most of its lines of business, namely, shopping malls, retail merchandising, banking and finance, and property development.

In the same press conference, the mayor also showed reporters the project plan of Bigfoot Global Solutions which is planning to buy the 16-hectare Pond F of the SRP.

The city government has already signed an agreement with Bigfoot, which plans to build a studio and soundstage in a two-hectare portions of the lot it will buy. In fact, it has already paid the city government over US$500 as a five-year advance payment.

Osmeña admitted to being hungry to sell SRP because the city government is ominously facing a problem on liquidity over the next two to three years.

Earlier, the mayor said the city government only needs one sale and after that it would become more selective in choosing the investors it would allow at the SRP. "Make a deal now because after that we will be picky."

He said the city is also making sure projects put up at the SRP would not only provide income but also employment opportunities for the Cebuanos.

Osmeña admitted the city is currently enjoying a fallback situation but is optimistic that it can sell five to 10 hectares of SRP and pay its debt obligations.

The city government still needs to pay a balance of P6.3 billion from its loan with the Japan Bank for International Cooperation as part of the 12.292 billion yen it borrowed from the bank to build the SRP, payable in 20 years. ( Wenna A. Berondo/JST )