First Pac seeks shareholders’ OK for PTIC stake purchase

Hong Kong-based First Pacific Co. Ltd. is convening a special general meeting of its shareholders soon to secure approval for the acquisition of the government’s 46-percent stake worth P25.2 billion in Philippine Telecommunications Investment Corp. (PTIC), a single-purpose holding company owning 13.8 percent of telecommunications giant Philippine Long Distance Telephone Co. (PLDT).

At the same time, Finance Secretary Margarito Teves told The STAR that his department is set to issue today a formal invitation to PTIC, which is 54 percent majority owned by two First Pacific subsidiaries, to exercise within a period of 30 days from Feb. 2 the right to match the P25.2-billion bid posted by Singapore investment firm Parallax Venture Fund for the 46 percent stake in PTIC.

First Pacific Investments Ltd. and First Pacific Investments (B.V.I.) Ltd., which together own approximately 44.26 percent of First Pacific’s issued share capital, have confirmed their intention to vote in favor of the resolutions to be proposed at the special general meeting covering the exercise of the right to match.

"More or less this is a done deal. The only question is whether First Pacific will exercise the right to match to the extent of the entire 46 percent or only half of it. But the intention is to acquire the entire bloc," a highly-placed source told The STAR.

If First Pacific acquires only a 23 percent additional stake in PTIC representing 3.2 percent of PLDT’s issued share capital, it will increase its attributable economic interest to 27.5 percent of PLDT’s issued common share capital.

First Pacific emphasized that it is still interested to exercise the right to match but wants flexibility to do so.

First Pacific which has a right to match under a shareholders’ agreement it entered into with the former owners of the 46 percent stake – the family of businessman Antonio Cojuangco – failed to exercise the right until the Feb. 1 deadline after it learned two days earlier that the Hong Kong Stock Exchange requires concurrence of First Pacific’s shareholders for the exercise of the right.

Teves that because of this, the supposed share purchase agreement between the government and First Pacific covering only half of the 46 percent was not signed as scheduled last Tuesday.

"Because of this, we are now proceeding to phase two of our plan which is for PTIC to now exercise the right to match. This will be done by First Pacific as the majority owners of PTIC," he said.

Therefore, while First Pacific conceded the right to match to PTIC, it will still be First Pacific eventually that will exercise the right, albeit with more flexibility.  

Originally, First Pacific was intending to acquire the entire 46 percent together with Japan’s NTT DocoMo until the latter backed out due to "pricing issues." 

However, with the new 30-day period, First Pacific now has more time to raise another P13 billion or convince NTT DoCoMo to contribute the remaining half.

Teves said that if by the end of the 30-day period beginning Feb. 2, First Pacific as majority owner of PTIC fails to exercise the right to match, then the shares will be awarded to Parallax as the highest bidder during the bid held last Dec. 8. Parallax posted a P2,100 per share bid or a total of P25.2 billion, lower than the market price of PLDT of P2,500 per share. The discount was reportedly given because of the bulk acquisition.

The government is intent on unloading its interests in PTIC regardless of which group would succeed at buying the shares.

Finance Undersecretary John Philip Sevilla Jr. told reporters yesterday that PTIC would have 30 days to match the offer made by Parallax Ventures Fund for the government shares in PTIC.

Sevilla is the DOF’s pointman for the PTIC transaction as well as other privatization projects that include the planned sale of government interests in various assets.

He said government had no choice but to extend the process and delay signing over the shares to Parallax.

Sevilla said the DOF was merely following the provisions of PTIC’s articles of incorporation which gave its shareholders the right to match any offer made for shares of the company.

He added government is not concerned about who would end up owning its shares as long as the transaction pushes through and the shares are ultimately unloaded.

According to Sevilla, the government’s only concern is to ensure that there would be a buyer for the shares at a price that would be acceptable to the government.

"We are doing this right-to-match process because we have to," Sevilla said. "Whether they want to match is their decision. How they will fund it is their problem."

Sevilla expressed confidence that the transaction would ultimately push through and the government would have the largest privatization proceeds since it sold the Fort Bonifacio property.

"We will get the money sooner or later," Sevilla said. "First Pacific or Parallax? We don’t care.  We just want the money." — with Des Ferriols