French firm CLSA Exchange Capital Inc. was earlier hired by the Privatization and Management Office (PMO), an attached agency of the Department of Finance, and by the Presidential Commission on Good Government (PCGG) which owns the assets, as financial advisor to implement the privatization plan for the two government TV stations, which includes determining the valuation as well as conducting the actual bidding.
Government is confident that it will be able to sell its stake in television networks Radio Philippine Network Inc. (RPN-9) and Intercontinental Broadcasting Corp. (IBC-13) by the second quarter of this year.
French firm CLSA Exchange Capital Inc. was earlier hired by the Privatization and Management Office (PMO), an attached agency of the Department of Finance, and by the Presidential Commission on Good Government (PCGG) which owns the assets, as financial advisor to implement the privatization plan for the two government TV stations, which includes determining the valuation as well as conducting the actual bidding.
The privatization of the two government stations is a joint venture between PMO and PCGG which are both disposition agents. However, the two decided to bid out the implementation of the privatization plan to get a better deal for government and entrust the activity to a group that has more experience in the field. CLSA, which is now on the second phase (preparation of the terms of reference for the bidding) of the implementation of the privatization plan, continues to report to PMO and PCGG.
RPN-9 operates six TV stations in six cities, TV relay and translator stations in Baguio City, Visayas and Mindanao, and 13 radio stations all over the country. Government’s interests in RPN-9 include equity, plus the license to operate a free TV station, physical assets and receivables.
Jose AR Bengzon III, PMO chief privatization officer told The STAR that CLSA is now in talks with potential investors as well as the various government agencies and shareholders to ensure a smooth implementation of the privatization plan as approved by the Privatization Council. "If ever there will be a stumbling block to the sale, it is the cooperation of the different stakeholders," he pointed out.
Just last week, the privatization plan was presented for the first time to the board of directors of the two TV stations. Dialogues will also be conducted with management and the employees as the government hopes to get the cooperation of all stakeholders. "We want to make them understand that it will also be for their own good that the stations be privatized," he said.
A meeting was also held with the National Telecommunications Commission (NTC) regarding the frequency of these TV stations. Dialogues are also being scheduled with the Bureau of Internal Revenue and the Bureau of Treasury.
Bengzon stressed that the most important concern right now is to stop the bleeding of these TV stations. "Government is not hoping to make money out of this exercise. The proceeds may not even be enough to settle all the obligations, including those pertaining to unpaid taxes to government. Government just wants to get out of the business. Anyway, it still has Channel 4," he said. The employees are also asking for their unpaid wages.
A few years ago, RPN-9 was valued at P1.3 billion and IBC 13 at P3.5 billion. However, Bengzon said CLSA is still updating the valuation.
"The buyer will basically be acquiring the franchise and a few selected assets. The transfer of the franchise to the new owner may, however, require congressional approval. However, it is a fact that in buying an asset, the buyer takes the risk but government will try its best to ensure a smooth transfer," Benzon explained.
Those that earlier expressed interest to acquire RPN-9 include businessman Manuel Pangilinan of Philippine Long Distance Telephone Co., Solar Sports of businessman Wilson Tieng and El Shaddai leader Mike Velarde.
The government owns around 32.4 percent of RPN 9 which is the portion surrendered by Marcos crony Roberto Benedicto. Also, the PCGG sequestered in 1986 the 40 percent shareholdings of Fareast Managers and Investors, allegedly owned by former president Marcos. Government also owns 80 percent of IBC 13.
CLSA has said that RPN-9 should have a definite plan as to what should be done with its employees when the privatization pushes through. This would avoid possible labor issues that might discourage potential investors.
RPN-9 also has debts with the PMO that it has to settle, involving advances made to partially finance its operating requirements.
No details are available regarding the unpaid taxes of RPN-9, but government said it intends to settle all liabilities of the broadcasting firm before it starts the search for a buyer.
There may still be some legal constraints to the disposition of RPN-9 and IBC-13. There are supposed to be pending legal suits from the former owners and other stockholders, although Bengzon said the other shareholders have so far posed no objection to the sale.
When the Arroyo administration was installed, RPN-9 and IBC-13 were practically bankrupt as they had only P2 million left in bank deposits and were heavily indebted to creditors. With no capital, these networks could not acquire new equipment, much less expand their programming.
Government officials have said that "it’s a miracle" that the two TV networks have managed to survive through those difficult years, marked by intense competition and the exodus of their staff and other talents to rival networks.