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The Philippines has suspended the sale of its majority stake in United Coconut Planters Bank after the country's Supreme Court granted an injunction requested by coconut farmers who have questioned the government's authority to sell the asset.
The auction, expected to be worth at least $350 million, has drawn much foreign interest as it was slated to be the first sale of a controlling stake in a Philippine bank since the government passed a law last year that allowed overseas firms to take full control of local lenders.
The Supreme Court on June 30 issued an indefinite stay on two executive orders by President Benigno Aquino that had paved the way for the sale of assets which were bought with taxes collected from coconut farmers during the administration of the late dictator Ferdinand Marcos.
The farmers have argued that the government holds the assets in trust and does not have the authority to sell.
The government is suspending the bidding process but remains confident in the validity of the executive orders, Toni Coo, officer-in-charge of the Department of Finance's Privatisation and Management Office told Reuters in a text message on Wednesday.
United Coconut is the country's 12th largest lender and had assets worth nearly 260 billion pesos ($5.8 billion) as of the end of last year.
The government had received 12 letters of intent to bid from foreign and local investors, including U.S. private equity firms Carlyle, Lone Star Funds and TPG Capital, as well as Japan's Mitsubishi UFJ Financial Group Inc and local conglomerate San Miguel Corp.
The government plans to sell its 73.9 percent stake for a minimum of 1.1 billion pesos but has also stipulated that the winning bidder must inject at least 15 billion pesos in capital. ($1 = 45.1700 Philippine pesos) (Reporting by Karen Lema and Neil Jerome Morales; Editing by Edwina Gibbs)
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