Investors To Back Philippine Air
MANILA, Philippines (AP) _ Two foreign investors have agreed to invest about $100 million in ailing Philippine Airlines on condition its workers guarantee not to launch a strike for 10 years, PAL chairman Lucio Tan said Sunday.
Tan, who owns 70 percent of the Philippine flag carrier, identified the investors, both based in Hong Kong, as Top World Investment Co. and Bank of East Asia.
Tan has pledged to raise $200 million by a June 4 government deadline to ensure the viability of a PAL rehabilitation plan. He has already placed in escrow $100 million, and he said the two Hong Kong investors would provide the other half.
``They’re willing to come. We have guaranteed some 10 years no strike,″ Tan said, adding a formal agreement with the investors could be forged as soon as majority of PAL’s 8,000 workers sign a 10-year no-strike accord.
More than half of the workers have already signed the accord in exchange for 60,000 shares of stocks in the company, Tan said. The 60,000 PAL shares are worth $1,600.
Two strikes last year worsened PAL’s financial woes, caused in part by Asia’s financial crisis and an ill-timed refleeting program.
PAL has been unable to service more than $2.2 billion in debt and has proposed a rehabilitation plan to help it recover.
The $200 million capital infusion is a key element of the plan, which also calls for deep cuts in PAL’s staff and fleet.
Finance Secretary Edgardo Espiritu said Tan, one of the Philippines’ richest men, has indicated he ``is more or less assured″ of raising the money by the deadline.
In case Tan fails to deliver, President Joseph Estrada said the government is continuing talks with two Middle Eastern groups and a Singapore group that may be interested in taking over PAL’s reins.
Although Estrada’s administration has adopted a policy of not bailing out financially troubled companies like PAL, he has pledged the Philippine carrier will continue operating as long as he is president.