GFIs ready to negotiate with BdO, if bid price is better than the Go deal

After the productive resolution of the impasse between the majority and the minority directors of the Equitable PCI Bank last week, the government financial institutions (GFIs) have made it clear that they are open to bidding negotiations, if the price is right.

Last week, the majority stakeholders led by the Social Security System (SSS), the Government Services and Insurance System (GSIS), and the private group, Trans Middle-East Phil. Equities Inc. (TMEQ’s) took control of the bank after the court issued a temporary restraining order (TRO) versus the minority group headed by Antonio Go.

The Go group, which controls 24.76-percent stake in EPCI, eventually sold its holdings to the SM Group-Banco de Oro Universal Bank (Banco de Oro). It will be recalled that Banco de Oro already made a bid for EPCI by entering into a sale agreement for the 26-percent equity share held by the SSS.

However, a legal case was filed by Sen. Sergio Osmeña III contesting the accord.

SSS president and chief executive officer Corazon de la Paz said they plan to renegotiate the December 2003 agreement with Banco de Oro due to price consideration while the case is still be tried in court.

"After the dust has settled, we will have to renegotiate," De la Paz said Friday.

GSIS president and general manager Winston Garcia said that they are prepared to negotiate a sale of the 12-percent equity share as long as "the price is right or more than P90 per share."

Meanwhile, De la Paz lamented that the price of P56.50 per EPCI Bank share reportedly offered by SM Group to the Go family in exchange for 24.76-percent stake in EPCI Bank "is not acceptable."

Interest income alone in the last 20 months is a lot of money, she added.

She explained that the price per share of P46.50 last December 2003 and the package for the settlement offered by BDO was "more than acceptable at that time." However, she stressed that "situation has changed."

On the issue of the pre-emptive rights should the 10.8-percent EBC Investments Inc. (EBCII), otherwise known as treasury shares, the SSS and GSIS board is considering subscribing.

"We will have to determine if we already exceed the ceiling for investment on a single firm," De la Paz, virtually, hinting the possibility of waiving the right to first refusal.

Garcia earlier indicated his willingness to subscribe to the pre-emptive rights to protect their interest.

The disposition of the 10.8-percent holdings of EBCII is being looked into should the Bangko Sentral ng Pilipinas (BSP) deny the appeal of EPCI Bank for a five-year extension period for its disposition or even shorter.

BSP Resolution 842 issued in June, ordered EBCII to draw-up and submit a specific action plan to increase its capital to address the impairment due to its continued holding of the treasury shares.Under the Corporation Code, treasury shares are shares of stock that have been issued and fully paid for but subsequently reacquired by the issuing corporation by purchase, redemption or through some other lawful means. EBCII, a subsidiary of EPCI Bank, has been found to have violated its commitment to unload of the treasury shares within two years after the shares were acquired in 1999. – Ted Torres