• How to successfully ignore the public

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    Emeterio Sd. Perez

    Emeterio Sd. Perez

    THE title of this piece says it all. Listed companies can often, if not always, take the public for granted. They will learn the trick from Globe Telecom Inc. and PLDT Inc., which now control the telecommunications industry with the help of foreigners.

    As for the public, it is time for them to unite to protect their interest as stockholders. Look at how they are being treated by Globe Telecom and PLDT, the buyers of the telecom assets of Liberty Telecoms Investments Inc.
    The two industry giants have combined forces that they have become too strong for the public to fight.

    The public may be able to hold on but for how long? What’s in store for them should they choose not sell (until today) their Liberty Telecom shares because they find the offer price of P2.20 per share too low to accept? Will they be deprived of their rights as stockholders to participate in annual stockholders’ meetings and the election of the members of the board?

    These are posers that only Vega Telecom Inc., parent of Liberty Telecoms, can answer. Will the company enlighten the public how it will deal with them if Liberty Telecoms is delisted from the Philippine Stock Exchange?

    Vega Telecom is equally owned by Globe Telecom Inc. and PLDT Inc. This ownership profile makes Liberty Telecoms a foreign company operating in the Philippines.

    From competitors, Globe Telecom and PLDT have finally become allies for financial convenience.

    SingTel’s control
    Consider the resulting ownership profile culled from a public ownership report (POR) as of July 13. Ayala Corp. (AC), the listed holding company of the Zobel family, who holds 40.725 million Globe Telecom common shares, or a 30.68 percent stake, while Singapore Telecom International Pte. Ltd. owns 62.646 million common shares, or 47.19 percent.

    Together, Globe Telecom’s two principal stockholders control 103.371 million common shares, or 77.87 percent. The public holds 29.237 million common shares, or 22.02 percent. The members of the board and a few Globe Telecom insiders own the remaining common shares.

    Incidentally, Globe Telecom has long been violating the pro-Filipino 60-40-percent ownership ratio between Filipinos and foreigners. Duediligencer is making this conclusion based on facts. If the public would care to protect their right as stockholders of Liberty Telecoms, they may want to review the suggestion.

    As far as ownership filings are concerned, Globe Telecom is controlled by SingTel. As a Filipino stock corporation, Ayala Corp. is deemed to control majority ownership by its preferred shareholdings. If this is the case, why disclose only the ownership of common shares in a POR, which makes it appear that Ayala Corp. is a minority stockholder?

    PLDT, on the other hand, is controlled by the Indonesian-owned First Pacific Co. Ltd., which is based in Hong Kong.

    Financials
    How would the public be able to appreciate a company, which, as of June 30, reported an accumulated deficit of P11.522 billion? They are looking at a company that had losses piling up over the years despite having undergone rehabilitation years ago.

    A deficit as big as that of Liberty Telecoms is not easy to wipe out even with the application of its capital stock of P6.537 billion; additional paid-in capital of P3.992 billion; and P21.793 million defined benefit plan reserves. Despite all these accounting entries, the company would still be capital-deficient by P970.36 million.

    Of course, the problem lies in the presentation of numbers. Liberty Telecoms made it appear that its burgeoning deficit over the years “indicates the existence of a material uncertainty that may cast doubt about the group’s ability to continue as a going concern.”

    Duediligencer lifted the quotations from the financial statement of Liberty Telecoms audited by R.G. Manabat & Co.

    Deadline
    The public stockholders of Liberty Telecoms have only until today to sell their shares to Vega Telecom Inc.
    Whether or not they accept its valuation at P2.20 per share, they cannot do anything against it except to go to court and question the price.

    As of yesterday, the public had not made a common stand against what they would consider a very low price for their combined ownership of 165.88 million LIB shares, equivalent to 12.82 percent.

    If the public were responsible for enabling Liberty Telecoms to list 1.294 billion issued and outstanding common shares, the majority stockholders would not care at all. They should remember that companies list their shares to save tax on issuing shares to their majority owners.

    As for the public, why should the families who control listed companies be grateful to them? They are good only for the convenience of the rich and the very rich who control the nation’s wealth.

    By the way, the so-called public ownership in listed companies is a misnomer, unless the SEC audits their ownership profile and determines they are compliant with the 10-percent minimum public ownership rule.

    esdperez@gmail.com

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