Stock Commentary: PAL and MAC confirm Joseph Chua is out

The clarification disclosure by Philippine Airlines [PAL 6.05 susp], the bankrupt airline owned by Lucio Tan Sr., was stark and to the point: “Joseph Chua has no authority to represent Dr. Lucio C. Tan, the Tan Family, and Lucio Tan Group of Companies.

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Any prior authority or representation given to Mr. Joseph Chua are deemed void and/or revoked”. Setting aside the fact that Lucio Tan is not at all a “doctor”, and that referring to himself as one outside of the campus of the school that bestowed the decorative credential goes against the rules and spirit of “honoris causa” doctorates, this development speaks to the turmoil and chaos behind the scenes at the “Lucio Tan Group of Companies”.

Mr. Chua is married to Rowena Tan, Lucio Tan’s eldest daughter from his first wife (Carmen Tan), and this Bilyonaryo article says that Mr. Chua was known to be Carmen’s most trusted and favored lieutenants during her meteoric rise through the ranks in recent years.

Bilyo quotes a source as saying that the decision to cut ties with Mr. Chua was made by Carmen (not Lucio Tan), but we don’t have any confirmation of that as of yet. MacroAsia [MAC 5.11 3.86%was forced to make a similar disclosure, as Mr. Chua was also a director of that company before this announcement.


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I’ve been talking about this for years, but there are massive problems in the Lucio Tan Universe (LTU) that have been compounding and accelerating the problems of governance in his many companies.

Lucio Tan has been in serious decline for some time now, and instead of road mapping a succession plan that might provide certainty as the balance of power shifts within the LTU, he’s seemingly tried to avoid the inevitable and neglect to make any tough decisions — which itself is a tough (and bad) decision.

The Bilyo article references the rumors that I’ve heard for many years now, which is that Lucio Tan’s first wife, Carmen Tan, is really the power-broker in the family.

In my experience, Carmen’s rise has coincided neatly with the incredible string of resignations by the extremely competent and experienced professionals that the Tan Family had previously been able to rely upon to keep its empire on track even during periods of distress.

Without those trusted professionals, the empire is increasingly controlled by vested family interests and exposed to the vulgar power struggles and in-fighting at a time when several of the empire’s key businesses are basically on fire, like PAL.

In my experience, it’s never a good sign for profitability when the percentage of family members in directorships or executive positions increases; so here’s to hoping that Carmen’s alleged take-down of Mr. Chua is not just a naked consolidation of Carmen’s power, but an opportunity for the group to elect competent, professional, non-family replacements. I’m not going to hold my breath, though. Lookout. 

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Merkado Barkada’s opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.



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