PLDT management wins 1st round in FPC-Gokongwei buyout issue

The Philippine Long Distance Telephone Co. (PLDT) management may have won the first round in the battle to prevent its parent firm First Pacific Co. Ltd. from selling its controlling shares in the country's biggest telecommunications giant, but the battle is far from being over.

First Pacific sources said that only businessman John Gokongwei Jr.'s exclusive right to buy its 24.4-percent stake in PLDT expired yesterday, but this does not mean that Gokongwei is already out of the picture.

"Only Mr. Gokongwei's exclusive right expired. The memorandum of agreement between First Pacific and the Gokongwei group remains and First Pacific is looking at all possible options to execute the MOA," the source said.

The expiration of the exclusivity period granted by First Pacific to Gokongwei on Sept. 30 means that First Pacific is now free to accept other offers for the purchase of its stake in PLDT valued at $925 million. But according to First Pacific spokesperson Rebecca Brown, there are no other proposals to date.

There are reports that First Pacific and the Gokongwei group may extend the exclusivity period, but both parties refused to confirm this.

SG Securities analyst Roberto Sassoon, who monitors First Pacific in Hong Kong, said the market will want to hear of some development soon or First Pacific shares will continue to languish. "If those expectations are not met, we're in danger of entering an extended period of torpor," he said.

PLDT shares prices have also dropped nearly 39 percent from P475.50 on June 5 when the MOA was announced. First Pacific had fallen 42 percent to HK$0.86 per share from $1.49 during the same period.

Analysts said the steep decline in PLDT share prices will make it more difficult for other parties to match the Gokongwei offer which valued PLDT at P1,130 per share.

Under the MOA signed last June 4, First Pacific and the Gokongwei group will establish a joint venture company whereby the share ownership will be one-third for the former and two-thirds for the Gokongwei group which will pay $616.6 million over a three-year period.

The MOA also covers the sale of First Pacific's 50.4 percent stake in Bonifacio Land Corp. (BLC).

One of the conditionalities for the preparation of the definitive sale agreement between the two parties is that the Gokongwei group conduct a due diligence investigation of PLDT and BLC, the results of which should have served as basis for the final agreement.

However, the PLDT board prevented the conduct of the due diligence by issuing a resolution which, among other things, warned PLDT personnel against assisting First Pacific and the Gokongwei group in the said investigation.

Gokongwei confirmed to The STAR that no due diligence has taken place and said that he has no plans of buying PLDT without first conducting such a review.

He said in an interview that he will not go out of his way to make the purchase of PLDT shares happen since it is a matter between First Pacific and PLDT. "If they do not deliver, then I do not pay," Gokongwei, who signed the MOA, said.

The big question now is whether or not PLDT management led by chairman Antonio Cojuangco Jr. and president Manuel Pangilinan will offer to buyout First Pacific, as earlier planned.

PLDT insiders told The STAR that there seems to be no need for Cojuangco and Pangilinan to offer to buy First Pacific's stake in PLDT and Bonifacio Land. "If First Pacific cannot sell to the Gokongwei group and there are no other interested buyers considering the magnitude of the amounts involved, then Cojuangco and Pangilinan have succeeded in maintaining the status quo as far as the ownership structure of PLDT is concerned," the insider said.

A close associate of Cojuangco, meanwhile, told Reuters that "what we want is for First Pacific to end the deal with Gokongwei. Two things can happen, they can wrap it or they can extend it. Let's see."

First Pacific last week said it would not complete the deal in the third quarter but that the agreement would still stand even after the end of September.

Meanwhile, STAR sources said Greenfield Development Corp. owned by Jose Yao Campos of United Laboratories and the Ayala group are still working on their proposal to buyout First Pacific‚s stake in Bonifacio Land Corp.

The proposal will basically call for the local group to pay a $100 million loan which Metro Pacific Corp. (majority owner of Bonifacio Land) owes Larouge BV. The loan is secured by 50.4 percent of Boni Land's shares.