SMC moves closer to acquiring Extelcom

MANILA, Philippines - The San Miguel Corp. (SMC) group has moved a step closer to realizing its bid to acquire majority ownership of Express Telecommunications Co. (Extelcom) from a company identified with businessman and former Trade Minister Roberto ‘Bobby’ Ongpin.

This was after the Supreme Court denied the petition filed by Lopez-owned Bayan Telecommunications Inc. to reverse the dismissal by the Court of Appeals (CA) of its opposition to the rehabilitation plan of Extelcom, removing the last obstacle to Extelcom’s operation as a financially sound company.

Trans Digital Excel, allegedly owned by Ongpin, has been in talks with SMC for a possible sale of its stake in Extelcom. However, sources revealed that the talks have been put on hold pending resolution of the cases filed by the Lopez group.

As its first salvo in the highly competitive telecommunications industry, SMC acquired a stake in Liberty Telecom and has recently soft launched its Wi-Tribe brand of broadband services. However, SMC’s telecommunications business would not be complete without a mobile phone company like Extelcom.

The only remedy available to BayanTel after the SC dismissal is to file a motion for reconsideration of the High Tribunal’s decision, and if denied, a second MR, although as a general rule, the latter is not allowed.

In its resolution, the SC second division said it decided to deny the petition because there was no reversible error when the CA stated that the petition for certiorari was a mere substitute for a lost appeal, and that the Regional Trial Court did not commit acts constituting grave abuse of discretion that would warrant a nullification of its orders.

The SC also denied the motion of BayanTel and Marifil Holdings Corp., a subsidiary of Bayantel, to refer the case to the court en banc for lack of merit. 

Bayantel, through Marifil, used to be the biggest shareholder of Extelcom with a 42-percent stake. But its interest had been reduced after a debt-to-equity conversion was implemented under a court-approved rehabilitation plan.

BayanTel’s claim that Extelcom’s rehabilitation plan is not valid because it had not been approved by two thirds of shareholders has been junked by the courts, saying this is not applicable since the approval is needed only in a debtor-initiated corporate rehabilitation.

Extelcom’s rehabilitation was creditor-initiated. Trans Digital Excel Inc., former Extelcom creditor and now its majority shareholder, said that to require shareholder approval would have, in effect, given shareholders veto power over the rehabilitation plan when it is unable or unwilling to pay its debts.

While BayanTel is now disputing the shareholder advances by Millicom Cellular (later acquired by TDE), TDE said minutes of various Extelcom shareholder and board meetings show that BayanTel proxies and board representatives had actively participated in passing resolutions approving the said advances.

TDE also reiterated that there was no abuse of discretion on the part of the rehabilitation court and the rehabilitation receiver had not violated his fiduciary duties since the rehabilitation plan was not secured through fraud.

It also noted that the rehabilitation court was not required to inform BayanTel directly of the proceedings since it had complied with the requirement that a notice to all parties was published in a newspaper of general circulation and it is not credible that BayanTel was ignorant of the proceedings.

BayanTel and Marifil’s motion to dismiss the rehabilitation plan and rehabilitation receiver were also filed long after their approval and not within the prescribed period, the courts said.

The petition for certiorari and prohibition filed before the CA was also time barred and was deemed filed as a substitute for a lost appeal.