Unable to raise funds from a recession-hit debt market, Kuwait-linked KGLI-NM Holdings Inc has backed out from a deal to buy out the Philippine's largest and oldest shipping company, Aboitiz Transport System (ATS).
Aboitiz Transport said in a statement that KGLI-NM Holdings had indicated that it would not proceed with the purchase of US$30 million worth of ATS' common shares.
'The deal is off. We are not giving them another extension,' Stephen Paridies, Aboitiz Equity Ventures' chief financial officer said.
In September last year, KGLI-NM Holdings offered to buy the combined 93 per cent stake of Aboitiz Equity and its sister firm in ATS for about US$100 million.
But last month it said it would limit its purchase to just 32 per cent of the company for US$30 million.
ATS said that following KGLI-NM Holdings's decision not to close the US$30 million purchase, the sale agreement is deemed to be terminated and that it will also be forfeiting the 100 million pesos (S$3.1 million) in 'earnest money' paid to Aboitiz Equity.
KGLI-NM is a joint venture between local shipping company Negros Holdings and Management Corp and Dutch firm KGL Investment BV, which in turn is owned by the KGL Investment Company of Kuwait.
In the meantime, ATS officials said that the shipping company, which operates primarily in the domestic market, will continue with plans to downsize its passenger operations while expanding its freight activities.
The Cebu-based ATS has been in the shipping business since the Aboitiz family purchased its first vessel, a twin-screw steamship in 1907. Today the group operates one of the most modern passenger and cargo fleets in the Philippines.
Its transport brands, Superferry, Supercat and Cebu Ferries operate a combined fleet of 17 vessels.
It is also in a partnership with AP Moeller-Maersk which runs two cargo vessels in the domestic market.
In recent years, however, ATS has had a difficult time coping with the escalating cost of fuel and intense competition from local airlines whose cheap fares have attracted away a substantial part of its passenger market.
Aboitiz Transport said in a statement that KGLI-NM Holdings had indicated that it would not proceed with the purchase of US$30 million worth of ATS' common shares.
'The deal is off. We are not giving them another extension,' Stephen Paridies, Aboitiz Equity Ventures' chief financial officer said.
In September last year, KGLI-NM Holdings offered to buy the combined 93 per cent stake of Aboitiz Equity and its sister firm in ATS for about US$100 million.
But last month it said it would limit its purchase to just 32 per cent of the company for US$30 million.
ATS said that following KGLI-NM Holdings's decision not to close the US$30 million purchase, the sale agreement is deemed to be terminated and that it will also be forfeiting the 100 million pesos (S$3.1 million) in 'earnest money' paid to Aboitiz Equity.
KGLI-NM is a joint venture between local shipping company Negros Holdings and Management Corp and Dutch firm KGL Investment BV, which in turn is owned by the KGL Investment Company of Kuwait.
In the meantime, ATS officials said that the shipping company, which operates primarily in the domestic market, will continue with plans to downsize its passenger operations while expanding its freight activities.
The Cebu-based ATS has been in the shipping business since the Aboitiz family purchased its first vessel, a twin-screw steamship in 1907. Today the group operates one of the most modern passenger and cargo fleets in the Philippines.
Its transport brands, Superferry, Supercat and Cebu Ferries operate a combined fleet of 17 vessels.
It is also in a partnership with AP Moeller-Maersk which runs two cargo vessels in the domestic market.
In recent years, however, ATS has had a difficult time coping with the escalating cost of fuel and intense competition from local airlines whose cheap fares have attracted away a substantial part of its passenger market.