S’pore’s UOBL ordered to pay minority stockholders

The Manila Regional Trial Court has ordered the Singapore-based United Overseas Bank Ltd. (UOBL) to pay P135.6 million in damages to a group of minority stockholders led by the Farmix group.

In his order, RTC judge Artemio Tipon said the minority group should be awarded its proportionate share in the proceeds of the sale of Westmont Bank to UOBL, including interest.

UOBL acquired a 60 percent controlling stake in Westmont Bank, owned by the group of former Finance Secretary Edgardo Espiritu, in 1999 through a leveraged buy-out.

But the Farmix group, composed of Farmix Fertilizer Corp., Pearlbank Securities Inc., and spouses Manuel Tankiansee and Juanita Tan, filed administrative complaints against the Espiritu group and UOBL, claiming that their rights as minority shareholders were violated and sought for their fair share in the sale transaction.

UOBL infused P1.4 billion worth of fresh capital in Westmont and turned over ownership of receivables and other assets to the Espiritu group as payment for the controlling stake.

However, the Farmix group claimed it should be entitled to a 10.36 percent share of the payment, representing its equity exposure in the bank, but failed to receive the payment.

Farmix filed the case to enforce its claim and seek exemplary damages as well.

The court awarded P5 million to the Farmix group in attorney’s fees, but not the exemplary damages the group sought.

Tipon said in his ruling, however, that UOBL could ask the Espiritu group for reimbursement of the damages it has to pay to minority shareholders in excess of P62.78 million, noting that there was an agreement between the Espiritu group and UOBL on such a contingency.

Last year, UOBL sought the approval of the Bangko Sentral ng Pilipinas (BSP) to acquire up to 90 percent of UOB Philippines and buy out its local partners. Foreign banks are now allowed up to 100 percent ownership in domestic bank operations.

However, the BSP deferred approval of the increase in equity pending the resolution of the case filed by the Farmix group.