PHILIPPINE AIRLINES (PAL) chairman Lucio Tan suffered a further setback in his long- running battle for control of the national carrier when the country's Securities and Exchange Commission (SEC) again barred plans for a new capital call.
The SEC has issued a temporary restraining order and injunction preventing the airline's shareholders from voting on a 2.5 billion peso ($97 million) capital expansion, pending the resolution of a continuing share row between the Chinese tobacco tycoon and the Government.
A collection of Government institutions is fighting for their minority stake in PR Holdings to be converted into direct PAL shares, effectively denying Tan control of the airline. Tan exercises control over PAL by virtue of his 51% interest in PR Holding, which owns 67% of the airline.
The SEC order stopped Tan from using his control of PAL, through PR Holding, to vote through the increased capitalisation. Tan, however, appears determined to fight and is threatening to take the SEC, to the country's Supreme Court. He argues the extra capital is badly needed to fund PAL's modernisation and expansion programme.
PAL's financial position in the meantime continues to decline with a first-quarter loss of 134.4 million pesos, compared with a 115.2 million peso's profit for the same period, in 1994.
The firm expects its losses to total 1.03 billion pesos for the 1995/6 financial year, ending on 31 March 1996. PAL last year made a record net loss of 1.72 billion pesos.
Source: Flight International
