The sale of Aboitiz Transport System Corp. (ATSC) to competitor Negros Navigation's Kuwaiti-owned parent, KGLI-NM Holdings Inc., is not pushing through after all, Aboitiz Equity Ventures Inc. (AEV) said in a statement on Thursday.

KGLI-NM has informed AEV and its principal stockholder, Aboitiz & Company Inc., that it will not proceed with the purchase of $30 million worth of ATSC common shares.

The Kuwaiti-controlled company apparently cited the current constraints in the debt markets as the reason for abandoning its planned purchase of the ATSC shares owned by AEV and ACO.

KGLI-NM had informed ATSC's parent companies last March 31, 2009 that the former is exercising its option under Section 5(c)(i) of the Term Sheet dated December 19,  2008 to purchase $30 million worth of ATSC shares from AEV and ACO.

"In view of KGLI-NM's decision not to close pursuant to the term sheet and its notice dated March 31, 2009, the term sheet dated December 19, 2008 as well as the memorandum of agreement dated September 23, 2008 between AEV and ACO, on one hand, and KGLI-NM, on the other hand, are now deemed terminated," said AEV.

Likewise, the P100 million option money paid by KGLI-NM to AEV and ACO is also forfeited, AEV added.

Analysts earlier branded ATSC's potential sale as "a good move" for the Aboitiz Group since the shipping firm has been taking a bad hit from volatile oil prices and stiff competition with budget airlines.

They added the sale would allow the group to focus on its other businesses, particularly on power.

"Demand for power is steady as opposed to the shipping and cargo businesses that are now suffering from high oil prices and little customer appetite," said Astro del Castillo of First Grade Holdings.

Aside from ATSC, the Aboitiz family controls Aboitiz Power Corp., the Philippines' second-largest power distribution and generation group, and Unionbank, one of the country's most profitable universal banks. It also has investments in food manufacturing and industries like construction and property development.

Through the years, the power generation and distribution business propelled the growth of the entire group, accounting for 69 percent of the group's bottomline. Unionbank, on the other hand, contributed 20 percent.

As much as 40 percent of the group's total assets are in their shipping, forwarding, and logistics businesses. Despite these investments, the transportation and logistics business contribute only about 6 percent to the group's total earnings.