House body clears sale of PLDT shares worth P25B

The House committee on good government cleared yesterday the sale of Philippine Long Distance Telephone Co. (PLDT) shares worth P25.2 billion that the government owns through Philippine Telecommunications Investment Corp. (PTIC).

Iloilo Rep. Arthur Defensor, committee chairman, told concerned officials and resource persons at the end of a three-hour hearing that he and his colleagues were satisfied by the explanations they heard about the deal.

He said it appeared that the government, through the Department of Finance, complied with the requirements of transparency and due diligence in selling its newly acquired asset.

However, Finance Secretary Margarito Teves informed the committee that the deal has been snagged by the failure of Hong Kong’s First Pacific Group, PLDT’s single biggest shareholder and which is the majority owner of PTIC, to match the winning P25.2-billion bid for the shares submitted by Singapore-based investment firm Parallax.

He said under PTIC’s articles of incorporation and as a PTIC shareholder, First Pacific, represented here by PLDT chairman Manuel Pangilinan, has the right to match the Parallax bid.

But with its failure, that right would now be given to PTIC itself, and since First Pacific is also the majority owner of PTIC, the Hong Kong firm would in effect enjoy an extended deadline to buy the PLDT shares, he said.

He said First Pacific failed to exercise its right to match because Hong Kong regulators told the company at the last minute that it needed the agreement of its shareholders for that purpose.

He added that the government would have signed an absolute deed of sale with First Pacific on Tuesday had it not been for the eleventh-hour problem.

The Defensor committee conducted a short inquiry amid allegations from concerned groups, including Katapat (Kilusan Tungo sa Pambansang Tangkilikan), that the government would lose nearly P5 billion from the transaction.

Katapat, whose leaders include Bishops Julio Labayen and Antonio Tobias, claims that the PLDT shares that the Sandiganbayan recently transferred to the government are worth at least P30 billion in the market, but are being sold only for P25.2 billion.

The Defensor panel finished its inquiry without inviting any of those criticizing the transaction.

The Sandiganbayan has ruled that the shares are part of the ill-gotten wealth of the Marcoses.

Teves and other finance officials explained that what the government is selling are not shares in PLDT but shares in PTIC, which is not a listed company and which in turn owns the PLDT shares that the Sandigan had transferred to the government.

However, they said that in valuing the PTIC shares, they considered the market value of the block of PLDT shares that it held.

Development Bank of the Philippines president Rey David, who served as adviser to the DOF in the transaction, said unlisted shares like those of PTIC are selling in the region at discounts ranging from 15 percent to 22 percent.

He said they considered all options to get maximum proceeds for the government and that they believed that the P25.2 billion is the best price.

In the course of the hearing, Batangas Rep. Hermilando Mandanas, formerly an investment banker, said there is another way that the government could get a better price.

"Break up PTIC into two companies, with the government ending up as 100 percent-owner of one company. It can then sell its PLDT shares directly in the market for P30 billion," he suggested.

David said they considered this option but that it was not feasible since First Pacific, PTIC’s majority owner, would not consent to breaking up the company.