Lawmakers back sale of government stake in PLDT for P25.2B

A bipartisan bloc in Congress has expressed support for the sale of government’s indirect 6.4 percent stake in Philippine Long Distance Telephone Co. (PLDT) so that government may finally realize the P25.2 billion expected proceeds from the sale.

In a House resolution filed yesterday, 10 congressmen from both the administration and the opposition crossed party lines to seek "the prompt resolution of all purported issues with respect to the transaction."

Led by Deputy Majority Leader Eduardo Gullas, the other authors of the resolution are Representatives Salacnib Baterina of Ilocos Sur, Luis Villafuerte of Camarines Sur, Ace Barbers of Surigao del Norte, Edcel Lagman of Albay, Federico Sandoval of Malabon-Navotas, Juan Miguel Zubiri of Bukidnon, Minority Floor Leader Francis Escudero, and Deputy Minority Leader Gilbert Remulla.

The Department of Finance (DOF) sold a total of 111,415 shares in Philippine Telecommunications Investment Corp. (PTIC) last Dec. 8, through a public bidding as part of an asset disposal strategy aimed at further building up government revenue and bridging the budget deficit.

The shares represent a 46-percent minority interest in PTIC, and implies an indirect 6.4-percent stake in PLDT.

The DOF said the government received an offer of P25.2 billion ($508 million) for the PTIC shares from Parallax Venture Fund XXVII, a unit of Singapore-based Parallax Capital Management LP.

The DOF said Parallax’s offer was the higher bid compared to the P24.9-billion overture of the only other bidder, Pan Asia Presidio Capital LP. Pan Asia’s offer was equal to the minimum bid price set by the DOF.

Finance Secretary Margarito Teves said the DOF consulted the Development Bank of the Philippines (DBP), one of the largest government financial institutions, for the purpose of establishing the minimum price.

Teves said the DBP determined the minimum price after thoroughly studying recent block sales of Philippine Stock Exchange-listed companies. He also said the DBP took into account other relevant considerations such as the fact that the shares being auctioned are PTIC shares (or stock in a non-listed investment holding firm), and not highly liquid PLDT shares.

In accordance with PTIC’s articles of incorporation, Teves said government has formally asked PTIC’s only other shareholder, Hong Kong-based First Pacific Co., if it is prepared to match Parallax’s P25.2-billion bid. Parallax’s bid is P300-million higher than the minimum set by the DOF.

First Pacific, which owns 54-percent of PTIC, earlier publicly declared it would exercise the right to match Parallax’s offer. First Pacific said it would forge an alliance with Japan’s NTT DoCoMo Inc. to match Parallax’s bid. NTT is one of the biggest global investors in telecommunications and a key shareholder of PLDT.

For his part, Rep. Gullas said the sale of the PTIC shares is part of the government’s policy of unloading its stake in sequestered businesses.

"We absolutely welcome any incremental investments by First Pacific and NTT, or any foreign investors for that matter, in the country’s rapidly advancing telecommunications industry," said Gullas.

"Any fresh foreign investments in the telecommunications sector should be welcomed by the country, as this will reinforce the industry’s global competitiveness through greater access to financial, technological and other resources," he added.

In their resolution, the 10 legislators stressed that: "It is in the national interest, whenever sales of government assets with values of the magnitude comparable to the PTIC shares are conducted, that the proper signals are conveyed to foreign and local investors."

"We must clearly demonstrate that government procedures are in order, and that government will abide by its commitment incident to the conduct of a bidding process that is open, public and competitive," they pointed out.

They added: "It is in the public interest to review, in aid of legislation, what needs to be done to accelerate the consummation of the sale and/or remedy whatever obstacles there may be to the completion of the transaction."

Should government receive the winning bid price of P25.2 billion as proceeds from the sale of the PTIC shares, they said, "such funds could be utilized by government to reduce the budgetary deficit."

They added the funds could also be used "to provide for the rehabilitation and reconstruction of vital public infrastructure such as school buildings, bridges, farm-to-market roads and irrigation systems damaged by typhoons Milenyo, Reming and Seniang."