Phil Long Distance Telephone Co.
I would love to discuss this with you over coffee on a saturday morning. This thread is an inappropriate venue for this so I just leave this at that.
The World is a Vampire . . .
...ok guys, RamblingMan and StockJunkie, those were very nice exchanges of ideas but you are not in the appropriate thread, pls always be on topic in your postings...standard warnings would be given to both of can try to repost this in my thread ...

PLDT moves to address foreign ownership issue

PHILIPPINE Long Distance Telephone Co. (PLDT) on Tuesday said it would create new preferred shares with full voting rights to reduce foreign control over the country’s biggest telecom company following a Supreme Court ruling that restricted the definition of ownership of public utilities.

In a statement, PLDT said its board approved the creation of a new class of redeemable preferred shares with full voting rights, which may be subscribed and owned by Philippine nationals.

PLDT will create 150 million voting preferred shares or about 45 percent of the expanded voting shares of the telco, leading to the reduction of the voting interests of foreign shareholders from the current 64 percent to about 36 percent.

As of last count, 64 percent of PLDT’s common shares is held by foreigners, while the remaining 34 percent is owned by Filipinos.

Including preferred shares, Filipinos own 87 percent, while foreigners the remaining 13 percent.

The creation of preferred shares with voting rights is subject to approval by the stockholders of PLDT owning two-thirds of the total outstanding shares.

The Pangilinan-led telco’s move came after the Supreme Court directed the Securities and Exchange Commission to determine if PLDT violated the Constitutional provision that limits foreign ownership of public utilities to 40 percent.

The High Tribunal granted the petition filed by Wilson Gamboa, a human-rights lawyer, seeking to annul the sale of the government-acquired 111,415 PLDT shares held by Philippine Telecommunications Investment Corp. to Hong Kong-based First Pacific Co. Ltd. The sale was priced at P25.2 billion.

First Pacific is one of the key shareholders of PLDT.

While it maintains that its current structure fully complies with the Constitution, PLDT said the SC ruling is not final and still subject to reconsideration.

“The Supreme Court ruling, until reversed, could disrupt PLDT operations and transactions. To safeguard the interests of its consumers, shareholders, holders of its securities and lenders, the board of directors approved the amendments to the Amended Articles of Incorporation of PLDT that will authorize the board of directors of PLDT to issue the voting preferred shares as and when the Board determines such issuance to be necessary to protect the interests of PLDT and its stakeholders. The issuance of the Voting Preferred Shares will result in an expanded voting capital in PLDT consisting of Common Shares and Voting Preferred Share,” the telco said.

When the voting preferred shares are issued, PLDT said the resulting capital structure of the company will be aligned with, and identical to the current capital structure of many listed Philippine companies engaged in business such as the operation of public utilities, mining and land development.

“PLDT believes that its current share structure is in full compliance with the Constitution, all applicable laws and regulations and various opinions of the Securities and Exchange Commission and it is prepared to exercise all its legal options in relation to the Supreme Court’s ruling in the Gamboa case,” Manuel Pangilinan, chairman of PLDT said.

Pangilinan said PLDT wants to assure all its stakeholders, particularly its customers, that it will be business as usual for the telco.

“We assure our shareholders and the general public that they will continue to reap the benefits from PLDT’s continued services,” he said.

Pangilinan earlier said the SC order is not good for PLDT, adding that other companies are in a similar structure, and in due time would suffer the same fate as the telco.

The PLDT board also accepted the resignation of Tatsu Kono as a director of the company effective immediately.

“The board expressed their gratitude to Kono for his invaluable contribution and wished him continued success in his new assignment in another investee company of NTT DoCoMo Inc.,” PLDT said.

Kono will be replaced by Setsuya Kimura as a director of the company to hold office effective immediately.

Kimura was also appointed as member of the Governance and Nomination Executive Compensation and Technology Strategy Committees and as advisor of the Audit Committee, effective immediately.

Kimura is the executive director of Strategic Investment & Alliance, Global Division of NTT DoCoMo. Prior to that, he served as director of Network Department of NTT DoCoMo.

PLDT shares rose to P2,398 on Tuesday from P2,396 the day before.
Globe pushes suspension of hearing on Digitel deal

GLOBE Telecom Inc. wants the National Telecommunications Commission to suspend the hearings on Philippine Long Distance Telephone Co.’s (PLDT) proposed acquisition Digital Telecommunications Philippines Inc. until such time that the market leader has addressed the Supreme Court’s ruling on possible violations of the Constitutional ban on foreign control of public utilities.

In a hearing, Rodolfo Salalima, Globe legal counsel said PLDT is not a public utility under the recent ruling of the Supreme Court because more than 40 percent of the telco’s voting shares are controlled by foreigners.

The SC earlier directed the Securities and Exchange Commission to determine if PLDT violated the Constitutional provision that limits foreign ownership of public utilities to 40 percent.

“They are not a Philippine corporation. Therefore, may we request the hearing proceedings to be suspended until the issues on the legal personality of PLDT are resolved,” Salalima said.

PLDT is seeking NTC approval of its acquisition of a 51.5 percent stake in Digitel owned by JG Summit Holdings Inc. for P69.2 billion.

Salalima said PLDT had admitted that 64 percent of their voting shares are controlled by foreigners.

In contrast, Globe is “very complaint” on the foreign ownership with Singapore Telecom owning only 23 percent, the lawyer said.

Jess Sandaow, convenor of Samahang Laban sa Monopoly also asked the NTC to suspend the hearings because of the questionable ownership of PLDT.

“The Supreme Court’s ruling should send a clear message to the NTC that PLDT has to resolve the legality of its ownership first even before proceedings with its acquisition of another major telecommunication firm,” Sandow said.

“With the validity of PLDT’s ownership under review, we wonder how the NTC or the Securities and Exchange Commission deem all the transactions entered into the company since the questionable acquisition of PLDT shares by First Pacific Co. Ltd. in 2007,” the consumer lobbyist said.

According to Section 11, Article XII of the Philippine Constitution, no franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at 60 percent of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than 50 years.

During the same hearing, Ray Espinosa, PLDT head of Regulatory Affairs and Policy however called on the NTC to proceed with the hearing.

“We strongly oppose the motion of Globe’s counsel. To begin with, there is no violation in the Supreme Court decision that PLDT is not a Philippine national,” Espinosa said.

“The decision of the SC in the Gamboa case is not yet final. This is subject to Motion of Reconsideration,” he said, adding that PLDT is not a party to the Gamboa case.

The lawyer said the franchise of a public utility is not open to collateral attack.

“The opposition of Globe’s represents a collateral attack on the franchise of PLDT,” he added.

PLDT aims to secure regulatory approval of its acquisition of Digitel by end of this month. The deal was supposed to have been consummated on June 30.

Sought for comment, Dennis Babaran, head of NTC’s legal department said there was no notice on the NTC to hold or suspend the hearing proceedings.

“We will note the manifestation of the counsel of Globe,” he added.

Globe shares rose to P890 apiece from P887 on Monday.
...this is the dark cloud so to speak...

Hearings on telco merger push through

THE NATIONAL Telecommunications Commission pushed through with processing the application of Philippine Long Distance Telephone Co.’s (PLDT) permit to take over Digital Telecommunications Philippines, Inc.

(Digitel) yesterday, resuming hearings on the matter after rival Globe Telecom, Inc. wavered on its opposition to the exercise.

“The commission has not ruled on [Globe Telecom, Inc.’s petition to suspend the hearings],” Dennis R. Babaran, the hearing officer and the state agency’s legal division head, told reporters yesterday after meetings resumed as scheduled.

Globe has not yet filed a written manifestation before the regulator on its petition asking the agency to suspend any further hearings on the case, Mr. Babaran said.

“It was only an oral manifestation made [last Tuesday],” Mr. Babaran said.

The hearings will go on to run on July 12 to 14 as intended, he added.

Those scheduled for today, meanwhile, have been cancelled as the cross-examinations of witnesses brought forward by PLDT and Digitel were completed yesterday.

PLDT’s planned acquisition of JG Summit Holdings, Inc.’s 51.55% stake in Digitel is expected to be completed by the end of this month.

The P69.2-billion deal will give PLDT some 70% of the domestic mobile market, leaving Ayala-led Globe to about 30% of the market.

Sought for comment, Globe’s chief legal counsel Rodolfo A. Salalima said in a text message that their camp would rather “think” about filing a written notice.

Globe on Tuesday had asked the regulator to suspend the hearings.

It argued that PLDT must first comply with foreign ownership laws before acquiring a Filipino company.

The court last week interpreted the 40% limit on foreign ownership of public utilities provided by the Constitution to mean that Filipinos must own 60% of shares entitled to a vote in board elections.

Foreign equity currently account for 64% of PLDT’s voting shares, according to the company.

The Securities and Exchange Commission, ordered by the court to apply the formula in checking PLDT’s compliance, has yet to act on the matter.

PLDT, in the meantime, has already readied the sale of more voting shares to comply with the new formula.

Next week will be the oppositors turn to present their witnesses and to allow [PLDT and Digitel] to cross-examine them,” Mr. Babaran said.

Mr. Babaran said that the oppositors Globe, consumer group Txtm8, and another telecommunications firm Sealand Telecommunications Co., Inc. have manifested that they will be presenting witnesses before the commission.

After all witnesses have been presented and cross-examined, Mr. Babaran said that the National Telecommunications Commission will be evaluating the case and submitted for resolution.

The evaluation may span for about two weeks... We have no idea if it can be finished before or on July 30,” Mr. Babaran said.

But for Ray C. Espinosa, PLDT head of regulatory affairs and policy: “We are hopeful that our application will be approved because we have shown that this [transaction] will benefit the public.”

Shares in PLDT closed 0.92% or P22 lower at P2,376 per share yesterday.

Mediaquest Holdings, Inc., a subsidiary of the Beneficial Trust Fund of PLDT, has a minority stake in BusinessWorld. -- Kathleen A. Martin
SEC defers action on PLDT case

THE SECURITIES and Exchange Commission (SEC) deferred discussions on Philippine Long Distance Telephone Co.’s (PLDT) possible violation of foreign ownership rules at its en banc meeting yesterday as it preferred to mull other legal actions instead.

SEC Commissioner Ma. Juanita Elegir-Cueto said that despite prior notice, the PLDT issue was not part of the commission’s meeting agenda.

“No, it was not discussed,” she told reporters in a brief interview yesterday after the meeting.

She said that SEC is still consulting with the Office of the Solicitor General if it will file a motion for reconsideration appealing the Supreme Court’s ruling on the embattled telco.

This, as the high court recently ordered the corporate regulator to apply a stricter definition to foreign ownership limits to PLDT: Filipinos must own 60% of the shares entitled to vote in board elections.

But foreign equity currently account for 64% of PLDT’s voting shares, according to the company.

If the court ruling on PLDT’s foreign ownership of shares is deemed final, the SEC is prepared to strengthen internal monitoring mechanisms, SEC commission secretary Gerard M. Lukban said in a separate interview.

“We may ask all companies to disclose their voting shares, whether they are local- or foreign-owned,” he said. “It will just entail the tweaking of a few mechanisms, specifically in monitoring,” Mr. Lukban said. -- Franz Jonathan G. de la Fuente
The only ones making money are the lawyers. 'San bayong application ko for law school haha!
The World is a Vampire . . .
PLDT’s equity structure strategy

MANUEL V. Pangilinan, top honcho of First Pacific whose subsidiaries control Philippine Long Distance Telephone Co. and a few other public utilities, had a neat trick to trim down the excess of 40 percent foreign equity in the company as ordered by a recent Supreme Court ruling.

He declared that he was issuing 150 million preferred voting shares to be acquired exclusively by the PLDT Beneficial Trust Fund. That, he said, would have the effect of reducing First Pacific’s foreign equity to 36 percent of voting shares.

That would have the effect of making rich by dividends the owners of the trust fund who are supposed to be employees of PLDT.

MVP controls the trust fund, probably by a voting trust agreement or as provided in the articles of incorporation creating the fund. MVP is a Filipino who represents the Indonesian stockholders of First Pacific and its subsidiaries in the Philippines.

Limited to that, indeed foreign equity in PLDT will be reduced to 36 percent. The violation of the Constitution as stated by the Supreme Court ruling will be erased.

The trust fund is Filipino, run and managed by MVP, also a Filipino. In that sense, PLDT will be Filipinized by the simple expedient of making the owners of the trust fund as probably the single biggest stockholder of the company.

It need not be said that if MVP has a voting trust agreement with the owners of the trust fund, he will vote the shares to Filipino aspirants for seats in the board of directors in all annual stockholders meetings.

Would there be a conflict between his loyalty to the Indonesian owners of First Pacific which acquired control of PLDT and his duty to make sure that foreign equity is permanently reduced to 36 percent?

Loyalty to the Filipino owners of the trust fund is presumed. But that is not incontrovertible proof that the foreign holdings in the company are indeed reduced to 36 percent as designed by MVP to comply with the ruling of the Supreme Court.

The only proof that the equity of First Pacific has indeed been reduced to levels allowed by the Constitution is the payment of dividends.

The idea of MVP to sell the 150 million voting preferred shares to the trust fund that he represents makes the PLDT employees probably the single biggest stockholder of PLDT.

As such, the workers, as a result of the issuance to them of 150 million preferred voting shares, become the richest group in the company if its members are paid regular cash dividends and other benefits.

To remove any doubt that MVP, who controls the trust fund, is not complying with the Supreme Court ruling, he must show proof that the dividends and other benefits are paid to the owners of the beneficial trust fund.

Absence of proof that he does will open him to suspicion that the shares of the fund in truth belong or are voted for the Indonesian company.

This can be done by the simple expedient of full disclosure to the Philippine Stock Exchange every time a cash dividend is paid.

The wholesome part of MVP’s scheme to comply with the SC ruling is that he was forced to make the employees the biggest stockholders of PLDT. There is no such other company in the Philippines. There should be a provision, however, that MVP, as manager of the beneficial trust fund, cannot trade the shares. Otherwise, the equity ratio of 60 percent Filipino and 40 percent foreign may again be disturbed.

It is small wonder that MVP or the chief executive of any such company manages and controls the trust fund. The money is contributed by the company for the benefit of the employees. Control and management in this sense may well mean MVP may do what he pleases with the fund.

The only critical part that will prove that the fund is indeed owned, though funded by PLDT, by the employees is if they get the dividends and other benefits which are the primary purpose of creating the fund, to begin with.

It would immensely benefit MVP and the Indonesian owners of First Pacific if a financial statement on the status of the fund is regularly published or submitted to the PSE.

San Miguel Corp. has a huge trust fund managed for the employees. The fund has been used in acquiring many assets and invested in many projects but no question of nationality has been raised because SMC is not a public utility where foreign ownership is limited to 40 percent by the Constitution.

PLDT, a public utility, used to be nearly completely owned by American investors who were given the same rights, except suffrage, as Filipino citizens under the Parity Agreement. It is in this sense that MVP was correct in saying that foreign investors have always been in PLDT.

The Filipinization process required by the Constitution should have reduced foreign ownership to 40 percent. Filipino control of the company was acquired by the group of the late Ramon Cojuangco, Luis Tirso Rivilla and Alfonso Yuchengco, among others.

Foreign ownership transferred to the Indonesians after the PCGG was allowed by the Supreme Court to sell the PLDT shares owned by Philippine Telecommunications Investment Corp. but sequestered on suspicions that Cojuangco, who ran PTIC, was fronting for Marcos.
Nice history lesson.
The World is a Vampire . . .

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