JG Summit to receive $600-M cash from sale of PLDT stake

Hong Kong – The JG Summit (JGS) Group will be receiving approximately $600 million (about P25.8 billion) in cash in exchange for agreeing to bring down its expected stake in Philippine Long Distance Telephone Co. (PLDT) from 12.8 percent to around eight percent.

PLDT chairman Manuel V. Pangilinan said in an interview here that both the First Pacific Group, of which he is the CEO and managing director, and the Japan-based NTT Group, have entered into separate agreements with JGS that will allow the two biggest private shareholding groups in PLDT to maintain their respective percentage of ownerships in the Philippines’ biggest telco.

As agreed, PLDT will be issuing new shares to JGS as consideration for acquiring the latter’s 51 percent stake in Digital Telecommunications Phils. Inc. (Digitel). This will result in JGS owning about 12.8 percent of PLDT. Total consideration is about P69.2 billion (about $1.6 billion).

But the creation and issuance of new shares will also result in First Pacific seeing its stake in PLDT drop from 26.47 percent to only 22 percent, and NTT, from 20 percent to 16 percent.

But Pangilinan revealed that both First Pacific and the NTT Group have indicated that once the settlement of the consideration is settled by way of new PLDT shares (one new PLDT share for every P2,500 consideration), both groups will acquire part of the PLDT shares held by JGS to allow them to maintain their interests prior to JGS entry into PLDT.

In a telephone interview, JGS president Lance Gokongwei said that once First Pacific and NTT fully exercise their respective options, JGS will end up with an eight percent stake in PLDT which will still entitle them to one board seat.

Of the $600 million, about $377 million will be from First Pacific and $263 million from NTT DoCoMo.

An associate company of First Pacific has entered into a put and call option agreement with JGS to acquire 5.81 million PLDT shares from JGS at a price of P2,500 per share. This will allow the First Pacific Group to maintain its investment in PLDT at the 25 percent level, Pangilinan said.

“For PLDT, this transaction fortifies its position as the leading telecommunications company in the Philippines. The valuation that this transaction puts on PLDT is a strong signal of the confidence we have in the company and its future,” Pangilinan said.

JGS, the listed holding company of the Gokongwei family, has likewise entered into an option agreement with Japan’s NTT DoCoMo that will allow the latter to purchase 4.56 million common shares in PLDT from JGS, thereby reducing the Gokongweis’ stake in PLDT from 12.8 percent to eight percent.