KGL Investment BV, beneficially owned by KGL Investment Co. of Kuwait, has joined the many companies that are feeling the pinch of the global economic downturn.

KGL Investment and partner Negros Holdings and Management Corp. were bullish just over four months ago when their joint venture, KGLI-NM Holdings Inc., agreed to buy the entire shareholdings of Cebu-based Aboitiz Equity Ventures Inc. in Aboitiz Transport System Corp. for P5 billion.

In early January this year, however, the Kuwaiti-led joint venture changed its tune and settled, instead, for an option to purchase a 42.2 percent stake in the operator of the SuperFerry vessels and the Philippines? largest passenger and cargo shipping company.

The Aboitiz group last month received P100 million from the prospective SuperFerry buyer as option money for the purchase of a 42.2 percent stake in Aboitiz Transport. The joint venture has until April 30 this year to complete the acquisition of up to 49 percent of the shipping company, including the 6.8 percent held by the public. At P1.84 per share (at the time of the agreement), the Aboitiz group expects to earn some P1.9 billion from the sale of its 1.032 billion shares, or 42.2 percent stake, while public shareholders will receive P306 million from the sale of 166.324 million shares.

The Aboitiz group and the buyer agreed to credit the option money of P100 million as part of the purchase price, provided that KGLI-NM Holdings acquire at least $30 million worth of shares from the Aboitiz group. The option money will be forfeited in favor of the Aboitiz group if the transaction fails to materialize prior to the closing date.

Banco de Oro declines

The grapevine said the Kuwaiti-led company had attempted to borrow $100 million from BDO Universal Bank to finance its original plan to buy Aboitiz Transport lock, stock and barrel for P5 billion. KGLI-NM Holdings planned to finance the acquisition with a $20-million equity and borrowings from BDO Universal Bank. But the grapevine said BDO insisted on a higher equity from KGLI-NM Holdings and a reduced credit of $60 million to minimize the bank?s risk.

KGLI-NM Holdings reportedly failed to put up the higher amount and decided to settle for an option-to-purchase agreement with the Aboitiz group and advance P100 million for the deal. KGLI-NM Holdings also agreed to negotiate a further option to acquire the remaining 51 percent of Aboitiz Transport at a later date.

The failed takeover bid has also dramatically changed an earlier game plan agreed by the two parties. Daniel ?Bitay? Lacson, who steered the family-owned Negros Navigation Co. for years until it sold out to Metro Pacific and ran aground in 2004 due to financial difficulties, was to join Aboitiz Transport as its new president, replacing Endika Aboitiz, who would have assumed the chairmanship of the company during a transition period.

The grapevine said with the buyer acquiring 49 percent of Aboitiz Transport at the most under the option-to-purchase deal, Endika will stay on as president. Bitay, meanwhile, will be invited to join the management committee of the shipping company.

The current management of Aboitiz Transport will also stay by virtue of the majority holdings of the Aboitiz group. KGLI-NM Holdings actually agreed earlier under the original plan to retain the current management during a transition period. The grapevine said KGLI-NM Holdings was not into the local shipping and cargo business and had asked the Aboitiz management to stay for a while until the new owners had familiarized themselves with Aboitiz Transport?s diversified operations.

Aboitiz Transport, which is mainly engaged in transporting people and cargos, operates under the brand names ?SuperFerry,? ?SuperCat,? ?Cebu Ferries? and ?2GO.? Its cargo movement services include containerization, RoRo services, logistics and supply chain solutions.

The company also provides ship management and manpower solutions worldwide under the Aboitiz-Jebsen group of companies.

?Bitay? to wait

Bitay?s ascension to the super shipping company, meanwhile, will have to wait. He suffered years of frustration in the industry after his family lost control of Nenaco to Metro Pacific and the big banks. He contented himself at one time as chairman of the Nenaco rehabilitation committee, whose members included Manuel V. Pangilinan, or MVP, banker Edward Go, Metro Pacific chief executive Jose Ma. Lim and then Nenaco president and chief executive Conrado Carballo.

E-mail: rayenano@yahoo.com or business@manilastandardtoday.com