Smart opposes sale of 17.7% stake in ETPI to Ongpin group

Smart Communications Inc. is reportedly questioning the propriety of the recent sale by Aerocom Investors and Managers Inc. of its 17.7-percent stake in Eastern Telecommunications Phils. Inc. (ETPI) to ISM Communication Corp., a group led by former Trade Minister Roberto Ongpin, The STAR has learned.

ISM, a publicly listed company, has entered into a share-swap agreement with Aerocom for the latter’s 17.7-percent stake in ETPI.

Highly placed sources revealed that Aerocom violated a provision in the ETPI articles of incorporation which gives existing shareholders the first option to acquire the stake of any selling shareholder when Aerocom did not give Smart the right of first refusal over the ETPI shares being unloaded. Smart owns 10.8 percent of ETPI.

Meanwhile, ousted ETPI chairman Roger Buckeridge has asked the Makati Regional Trial Court to prevent ISM from acquiring any stake in ETPI and to order his and Nenita Lim Cruz’s reinstatement as officers of ETPI.

Buckeridge claimed that he was outvoted by majority of the defendant board members in passing an illegal and unconstitutional resolution.

He noted that last May 10, ETPI, by a majority vote of two PCGG-appointed directors and one private sector director, voted to oust him and Lim-Cruz as chairman and president/CEO, respectively, and voted to allow ISM to conduct a due diligence inspection of ETPI.

Buckeridge claimed that any transfer of shares from ETPI to ISM, which is not an existing stockholder, is violative of Article 10 of ETPI’s articles of incorporation which states that if any stockholder desires to dispose, transfer, sell, or assign any shares of stock of ETPI, except in the case of any disposal between or among incorporators or corporations controlled by incorporators, the offeror shall give a right of first refusal to the corporation and if the latter fails or refuses to accept all offered stock, to all stockholders of record of the ETPI pro rata.

The right of preemption and right of first refusal may be assigned by a stockholder to a third person so long as the latter is acceptable to all stockholders of the corporation.

He alleged that the transfer of ETPI shares to Ongpin, a close associate of former President Ferdinand Marcos, is prohibited. "In fact, the PCGG has expressed its adherence to the policy that recovered ill-gotten wealth should not be offered to former associates of Marcos," he said.

Buckeridge added that the PCGG votes which paved the way for ISM’s due diligence of ETPI flagrantly violated the guidelines set by the Supreme Court on the disposition of sequestered assets. "The conspiracy between the two PCGG appointed directors who constituted the swing votes in ETPI’s action and ISM is simply too glaring to ignore, too odious to allow," he said.

In his petition, he also asked that he and Lim-Cruz be restored to their former positions in ETPI and sought the issuance of an order to temporarily restrain ETPI from transfering any share in favor of ISM

ETPI is 40 percent owned by Australian investors while the rest is owned by Pablo Lobregat (18 percent), 10.8 percent by Smart. The remainder consists of sequestered shares now under the Presidential Commission on Good Government (PCGG).

The same sources disclosed that ISM is also planning to make an offer to the other stakeholders of ETPI for a similar share-swap agreement as that with Aerocom.

According to the National Telecommunications Commission (NTC), the sale by Aerocom to ISM does not require its approval yet since it is still below 40 percent of ETPI’s outstanding shares. "But once 40 percent or more of ETPI’s ownership is transferred, then it will require NTC approval," NTC common carrier authorization department head Edgardo Cabarrios told The STAR.