Cojuangco, Pangilinan retain PLDT posts

What was supposed to be a non-occasion turned into a circus of sorts as the annual stockholders meeting and board election of the Philippine Long Distance Telephone Co. (PLDT) yesterday turned into a show of support for the embattled management, led by chairman Antonio O. Cojuangco Jr. and president and CEO Manuel V. Pangilinan, amidst a ‘hostile‘ takeover by the Gokongwei group.

The incumbent 13-member board, led by Cojuangco and Pangilinan, received another one-year term. Also elected were Helen Yuchengco-Dee, Ray Espinosa, Corazon dela Paz, Napoleon Nazareno, NTT's Taketo Suzuki and Mitsuhiro Takase, Ricardo Zarate, Lourdes Rausa-Chan, Fr. Bienvenido Nebres, Alberto del Rosario, and Pedro Roxas.

Fears that the First Pacific and Gokongwei group may try to nominate new representatives to the board to represent their interest were immediately put to rest when no additional nominees were named in addition to the 13 identified with the camp of Cojuangco and Pangilinan which is reportedly putting up a management counter-offer to the deal presented by the Gokongwei group.

"The PLDT management had more than enough proxies to vote all 13 directors without regard to the shares held by the First Pacific companies in PLDT. The 13 directors had the full support of the Cojuangco group, the Yuchengco group, NTT, the foreign American depositary receipt holders (through Citibank), and local investors. It's a vindication of the position taken by the same PLDT board and management against a takeover attempt by the Gokongwei group," a top PLDT official told The STAR.

The Gokongweis are paying $616.6 million for a two-thirds stake in a joint venture with First Pacific that will assume FPC's 24.4-percent interest in PLDT. The joint venture will also pay $106 million to First Pacific for a loan extended to subsidiary Metro Pacific Corp. secured by a 50.4 percent stake in Bonifacio Land Corp.

In an interview, Cojuangco, said that all moves are still being studied. "Right now, we still have not received a formal proposal from First Pacific so we do not know what move to take," Cojuangco said.

Meanwhile, asked whether Japan's Nippon Telegraph and Telephone Co. (NTT) will exercise its right of first refusal over FPC's stake (a right contained in the shareholdersí agreement between NTT and FPC), Suzuki, who is the chief operating advisor of PLDT and a board advisor of NTT World Telecommunications, said "First Pacific is not in a position to breach the agreement."

Suzuki also said that while the exercise of the right of first refusal by NTT is a strategy to prevent the Gokongwei deal, he said the PLDT by-laws provision prohibiting a competitor from being elected to the PLDT board is another. It will be recalled that Gokongwei group chairman emeritus John Gokongwei, Jr. was barred from being elected to the San Miguel Corp. board many years ago by virtue of the same anti-competitor clause in the SMC by-laws.

The attendance at yesterday's stockholders' meeting probably set a record of sorts for the company, with the Dusit Hotel Nikko grand ballroom jampacked and highly secured. Many stockholders were not allowed to enter the room.

The shareholders gave a resounding applause twice in the meeting, the first when Pangilinan said he was looking forward to seeing them next year, and second, when the 13 nominees were declared elected.

Outside of the stockholders' meeting which started at 4 p.m., PLDT employees held a rally to show their support for Pangilinan and Cojuangco and the incumbent management and to signify their opposition to the proposed sale of part of FPC's 24.4-percent stake in PLDT to the Gokongwei group, which was already declared a competitor and, therefore, will not be allowed to be represented in the board, as per a PLDT board resolution issued earlier.

In response to concerns about the impact of recent talks between First Pacific Co. and the Gokongwei group concerning FPC's stake in PLDT, Pangilinan emphasized that the transaction has not been concluded. "And indeed, numerous issues have to be resolved before it can be finalized. In the meantime, let me assure you that we are not distracted by this development, and we remain committed to ensuring we will do out best for all our shareholders," he told stockholders.

Pangilinan also noted that in enhancing the interest of all shareholders, it is imperative that the board of PLDT continue to be mindful of its fiduciary duties to the company and its various stakeholders and the board and management remain united, as they firmly are in the present instance, in pursuing the goals they have set for themselves.

He said PLDT is a company with national transcendence, that its significance lies beyond the mere interest of any one or more stakeholders.

The PLDT president also noted that while the results of last year keeps them enthusiastic about the future, and that they are confident that further improvements in profits, cash flows, and revenues can be expected this year and for many years to come, he is mindful that the companyís share price still has to respond to these positive developments and that much needs to be done to improve the share price.

This only means we have to prove to the market that we can maintain consistent and steady increases in our profits, cash flows, and revenues year after year. It means as well that debt reduction remains a key result area for management. This clearly implies that costs and capital expenditures must be better managed ands controlled," he said.

PLDT’s net profits for 2001 reached P3.4 billion, tripling the previous yearís income. Net income for the first quarter of 2002, meanwhile, surged to P1.3 billion, more than double the P629 million recorded in the same period of last year.

Pangilinan likewise told the shareholders that given the strong cash flows of PLDT’s different businesses, it can readily pay for about half of the company’s loans, amounting to $1.3 billion, from internally generated funds. ìIn so far as the other half of $650 million is concerned, I am confident that we can raise external financing to fund and extend its maturity," he said.

As far as an $80 million overseas investment loan being negotiated with the Japan Bank for International Cooperation (JICA), he said the bank has completed the credit analysis of PLDT and that barring external adverse developments, final approval by the JBIC board may be expected by the end of this month.

He also revealed that PLDT is in the process of completing the refinancing, over a longer term, of certain syndicated loans lead-managed by Citibank and ING Bank, totaling $260 million.