THE Indonesian-owned First Pacific Co. Ltd., which is based in Hong Kong, is engaged in industries in which only Filipino citizens are qualified to own 60 percent or more of outstanding common shares and voting preferred shares. How this happened or was allowed to happen may not be too difficult to understand going by documents available for perusal by the public.
First Pacific, though, is not directly the investor in its local investment activities. It owns major investments—again not directly—in a listed company, which is Metro Pacific Investments Corp. (MPIC).
In filings posted on the website of the Philippine Stock Exchange, the public—and all Filipinos for that matter—may be interested to know how the Indonesians are able to get into water, highways, properties and other ventures that should be for the exclusive majority ownership of Filipinos.
MPIC’s ownership data
Here is MPIC’s own analysis that shows how it ended up as the indirect controlling owner and beneficial stockholder of a number of ventures in the Philippines.
“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 40.0 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.”
The four letters MPHI stand for Metro Pacific Holdings Inc. (For better understanding of MPIC’s ownership presentation, please see Duediligencer, “First Pacific’s local affiliates and their Filipino stockholders,” which appeared on May 5, 2015)
Metro Pacific Investments is the listed holding company of First Pacific. As of March 31, it reported a voting capital stock of 32.895 billion outstanding shares divided into 27.895 billion common shares and 5 billion Class A preferred shares.
In its filing, MPIC said Filipinos control 18.036 billion or 64.66 percent of 27.895 billion outstanding common shares, while foreigners hold 9.859 billion or 35.34 percent.
Foreign ownership control
On the PSE website, MPIC claims that foreign ownership in it is limited to 40 percent. Is it?
As far as First Pacific is concerned, MPHI, which is not listed, is a Filipino company. Going by its parent’s claim, MPIC said so too and listed MPHI, being Filipino, as holder of 14.523 billion common shares or 52.06 percent. In addition, it said MPHI owns MPIC’s 5 billion Class A preferred shares.
Has MPHI been a direct subsidiary of First Pacific, it would not have qualified as a Filipino company even if it is registered with the Philippines’ Securities and Exchange Commission. Because it is a Filipino company because MPHI is Filipino, every company that MPIC owns and holds for First Pacific in the country is deemed Filipino.
In short, MPIC enables First Pacific to make indirect but significant investments and indirect control in Philippine Long Distance Telephone Co. and Manila Electric Co., among a number of companies operating in the Philippines.
In computing MPIC’s ownership profile, Duediligencer classifies MPHI as a subsidiary of First Pacific contrary to the thinking of the Securities and Exchange Commission and the Philippine Stock Exchange.
Aside from MPHI, PCD Nominee Corp. also holds for 9.859 billion MPIC shares or 35.34 percent for foreigners. This block and MPHI’s 14.523 billion MPIC shares total 24.382 billion shares or 87.406 percent.
If MPIC has not “given” MPHI Filipino citizenship, it—meaning MPIC—would have become a foreigner too. Being foreign-owned, it and its parent First Pacific would not have qualified to control PLDT and Meralco and other “restricted” industries. Yet, it does because of MPHI’s baptism as a Filipino company.
The series of computation should not end with MPIC’s outstanding common shares. It should also include the company’s 5 billion outstanding voting preferred shares, which are all held by MPHI.
By adding MPHI-held 5 billion preferred shares, MPIC would have 29.382 billion voting shares or 89.321 percent indirectly held by the Indonesian-owned First Pacific. Ironically, MPIC’s public ownership report does not reflect this huge foreign ownership. Instead, it said the public holds 13.312 billion shares or 47.72 percent of 27.895 billion outstanding common shares as of March 31.
PCD Nominee Corp. holds 13.327 billion MPIC shares – 9.859 billion for Filipinos and 3.468 billion for foreigners. For the sake of the public, Duediligencer can identify only the Government Service Insurance System as a stockholder with 517.1 million shares. As for the owners of the remaining 12.8099 billion shares, their identities are the stock market’s biggest secrets.
As board chairman, Manuel V. Pangilinan heads the list of MPIC’s five highest-paid executives. The others are Jose Ma. K. Lim, president and CEO; David J. Nicol, chief finance officer; Robin Michael Velasco, VP-human resources; and Albert William Pulido, VP-investor relations.
In 2014, MVP and company received P97.865 million in salary and P107.716 million in bonuses. In 2015, they got less despite the “others” of P27.533 million because their salaries dropped to P82.272 million and their bonuses to P75.154 million.
This year, MPIC appears to be more generous than in the previous two years because of additional compensation of P300.467 million classified under “others.” It estimated the top five executives’ salaries at P94 million and their bonuses at P75 million for 2016.
That’s a total of P469.467 million for MVP and MPIC’s four other top executives. This would translate to P93.893 million each, which is not bad for a year’s work.