AIF seeks court ruling on BayanTel shares

AIG’s Asian Infrastructure Fund (AIF) has filed a motion for summary judgment with a New York state court against Benpres Holdings Corp. and its subsidiary Bayan Telecommunications Holdings Corp. over claims of about $44.485-million worth of option shares in BayanTel.

Benpres corporate secretary Enrique Quiason told the Philippine Stock Exchange that the motion was in lieu of the civil suit filed last Dec. 19, 2002 by AIF before a federal trial court in New York.

AIF has sued Benpres, BayanTel, and some officers and directors and others involved in the placement of the option shares for damages alleging to violations of the US federal securities laws and the New York state law.

The complaint basically alleges that the defendants, including the placement agent in the sale of the convertible preferred shares of BayanTel, "failed to disclose to AIG at the time it purchased such shares that certain institutional stockholders of BayanTel had a pre-existing put right to Benpres of their common shares in BayanTel."

AIF had purchased convertible preferred shares of BayanTel, one of the most debt-laden units of the Lopez Group, in 1998 which are guaranteed by Benpres. The option to convert the said shares eventually matured last Jan. 16.

On Oct. 25, 2002, Benpres received notice from AIF, the regional investment arm of the American Insurance Group, informing them that it was exercising the option to require Benpres to acquire or buy back Class A shares held by AIF in BayanTel, which is 47.32 percent owned by Benpres.

Based on a shareholders agreement (SA) entered into by Benpres with certain shareholders or option holders of BayanTel, the shareholders have the option to require the repurchase of their shares, under certain conditions, "upon the occurrence of certain events specified in the SA or in 2002, whichever comes first."