FROM Metro Pacific Investments Corp., Due Diligencer is taking the readers of The Manila Times thru piles of documents to trace the identities of the stockholders of a listed company that has often been identified with the First Pacific group of companies.
As reflected in various filings, Filipinos, not Indonesians through the Hong Kong-based First Pacific group, are the majority stockholders of Metro Pacific Investments Corp. Manuel Pangilinan, chairman of MPIC’s 15-man board, and four other Filipinos, indirectly control MPIC through their 100-percent ownership of outstanding shares in Pilipinas Enterprise Management Holdings Inc. (PEMHI).
But how did Filipinos end up the majority stockholders of what should be the Indonesian group’s local flagship?
Here is the answer. In layer after layer of ownerships, PEMHI is MPIC’s final corporate stockholder with an all-Filipino lineup of stockholders. Of its 45 million outstanding shares, Pangilinan owns 13.05 million or 29 percent; Alfred Panlilio and Victorino Vargas, 10.97 million each or 24.4 percent each; Rene Banez and Ma. Lourdes Rausa-Chan, 5 million shares each or 11.1 percent each.
MPIC’s 5 millionaires
For their holdings, these stockholders paid a total of P45.54 million. Individually, Pangilinan paid P39.15 million for his holdings; Panlilio and Vargas, P2.19 million each; and Banez and Rausa-Chan, P1 million each.
The 4 percent difference between Pangilinan’s PEMHI ownership and that of the four other stockholders may be small, but the gap in the amount of investments is big. This is because Pangilinan subscribed to the more expensive Class A preferred shares at a par value of P3 per share that cost him P3 million, and 13.06 million Class B preferred shares for which he paid P39.15 million for a total investment of P39.15 million.
On the other hand, Panlilio, Vargas, Banez and Rausa-Chan paid much less for subscribing to 5 million Class B preferred shares each at a par value of only P0.20 per share.
This ownership profile may be an irony but it does not end with the composition of capital stock. Establishing “who owns what” in MPIC by going through more SEC (Securities and Exchange Commission) documents should complete the story.
As posted on the website of the Philippine Stock Exchange, Metro Pacific Holdings Inc. (MPHI) holds 14.52 billion MPIC shares, or 52.12 percent. This ownership makes it the company’s controlling stockholder. In addition, it owns all 5 billion preferred A shares issued by MPIC.
If MPHI is MPIC’s majority stockholder, who are its stockholders?
MPIC provided the answer by defining its ownership profile: “MPHI is a Philippine corporation whose stockholders are Enterprise Investment Holdings Inc. (EIH), Intalink B.V. and First Pacific International Limited (FPIL).
“First Pacific Company Limited (FPC), a company incorporated in Bermuda and listed in Hong Kong, through its subsidiaries Intalink B.V, and FPIL, holds 40 percent equity interest in EIH and investment financing, which under Hong Kong Generally Accepted Accounting Principles, require FPC to account for the results and assets and liabilities of EIH and its subsidiaries as part of FPC group of companies in Hong Kong.”
Incidentally, MPIC failed to name MPHI’s stockholders and those of Enterprise Holdings. Due Diligencer, however, is simplifying the story behind MPIC and its stockholders. It is starting the analysis with MPHI.
As described in MPIC’s ownership profile, First Pacific owns 40 percent of MPHI’s outstanding capital stock while EIH holds 60 percent. In a general information sheet, EIH listed Pilipinas Pacific Enterprise Holdings Inc. as holder of 60 million shares or 60 percent.
EIH’s 60 percent ownership of MPHI’s outstanding shares translates to indirect ownership of 14.52 billion MPIC shares, or 52.12 percent. Since Pilipinas Pacific owns 60 percent of EIH, its ownership translates to 8.71 billion MPIC shares (60 percent of 14.52 billion MPIC shares) with market value of P38.86 billion at P4.46 per share. First Pacific’s indirect holdings of 40 percent in EIH would result in it indirectly holding 5.8 billion MPIC shares (40 percent of 14.52 billion MPIC shares) worth P25.9 billion.
In turn, PEMHI’s 60-percent holdings in Pilipinas Pacific would be equivalent to 5.23MPIC shares (60 percent of 8.71 billion MPIC shares) while First Pacific Enterprise Holdings B.V.’s 40 percent is equivalent to 3.48 billion MPIC shares.
Finally, here is a computation of the paper wealth of MVP and four other PEMHI stockholders: With his 29-percent PEMHI holdings, MVP would indirectly own 1.52 billion MPIC shares (29 percent of 5.23 billion MPIC shares) worth P6.76 billion; Panlilio’s and Vargas’ 24.4 percent, equivalent to 1.28 billion MPIC shares, worth P5.7 billion; Banez and Rausa-Chan’s 11.1 percent each or 580.3 million MPIC shares each, would be worth P2.59 billion each.
It must have taken the Filipino lawyers of the First Pacific group a lot of creativity to come out with one company—MPIC—being majority owned by another –MPHI —which, in turn, is 60-percent owned by a Filipino company—Enterprise Holdings—of which another corporation – Pilipinas Pacific—is the majority stockholder, which is 60-perccent controlled by another company—PEMHI. The big puzzle here is why First Pacific had to mystify the public with these layers of ownership.