The PLDT subsidiary said Aerocom must give Smart and other ETPI stockholders the right of preemption over the sale of its stake in ETPI, a right embodied in the latter’s articles of incorporation.
"Smart asserts its right of first refusal to the proposed sale by Aerocom of its 17.7-percent equity interest in ETPI to the Ongpin group," said Rogelio V. Quevedo, head of Smart’s legal and carrier business group, confirming an earlier report by The STAR that the country’s leading mobile phone company is opposing the sale by Aerocom to ISM.
Aerocom has sold its approximately 4.6 million Class A common shares in ETPI via a share swap agreement to ISM, which according to a STAR report, is planning to engage in the cellular business itself by utilizing the license of Extelcom, a portion of whose shares ISM has reportedly acquired.
Quevedo cited Article 10 of ETPI’s amended articles of incorporation, which states that the right of first refusal applies to any sale, transfer, disposition or assignment of shares by any stockholder of ETPI, except when such sale, transfer, disposition or assignment is done between or among the incorporators of ETPI or corporations controlled by such incorporators.
"Since none of the exceptions apply, Smart and allother ETPI stockholders should be given the option to exercise the right of first refusal over the reported sale by Aerocom of its shares to the Ongpin group," he said.
Smart owns 9.8-percent equity interest in ETPI. Forty percent is owned by Australian Gigahertz Network International Pty. Ltd., while 18 percent is owned by Pablo Lobregat and the Aerocom group.
The remainder consists of sequestered shares now under the Presidential Commission on Good Government (PCGG).
Aside from the Aerocom shares, ISM has disclosed that it is in talks with the Australian group for the acquisition of the latter’s 40 percent stake in ETPI.
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.
Under the terms of the agreement with Aerocom, ISM will issue around 6.8 billion new shares, which shall be taken from an increased in its authorized capital stock. The increase in ISM’s capital stock has already been approved by the shareholders. In exchange, ISM will receive around 4.6 million Class A shares of ETPI constituting 17.7 percent of the latter’s outstanding capital.
ISM president Eric Recto has said that the agreement marks the beginning of ISM’s transformation into a telecommunications company which had been on hold pending the completion of the acquisition of assets necessary for its business. There are other related opportunities which ISM is currently working on and shall be disclosed when these are completed, he said.
ETPI is currently the subject of a dispute between its management and Australian investors after the latter’s representatives were removed from the board of the telecommunications firm.
Smart also revealed earlier that is planning to sue CPR Philippines for not honoring a 2001 agreement to purchase the former’s 9.8-percent equity interest in ETPI.
One of CPR’s affiliate is AGN Philippines (AGNP), the local subsidiary of the Australian group which controls 40 percent of ETPI. AGNP has been opposing the entry of ISM into ETPI as well as the alleged conspiracy within the board to deliver control to Ongpin’s group.
"CPR can be held liable for failure to complete their acquisition of Smart’s shares worth P214.4 million as provided in our conditional share purchase agreement (CSPA) with CPR," Quevedo earlier said.
Smart waived its right of first refusal in connection with the sale to PRN Philippines of British firm Cable and Wireless Plc’s 40- percent stake in ETPI.