IT is not easy to decipher the disclosures on the reported planned acquisition by businessman Ramon Ang, president of San Miguel Corp. (SMC), of a “30 percent equity” in GMA Networks Inc. Perhaps the public may also be confused by the number as it appeared in news reports.
Even the three significant stockholders of GMA 7, who had decided to call off the negotiations on Ang’s either proposed “buy-in,” failed to explain what this “30 percent” covered. Was it the entire capital stock or only the common shares?
GMA 7’s three significant stockholders who call the shots at GMA 7 are Gilberto Duavit Jr., Felipe Gozon and Joel Marcelo Jimenez. Thru their companies, they directly own 3 billion GMA 7 common shares, or 92.08 percent. They also control 7.4 billion preferred shares equivalent to 99.04 percent.
(This ownership profile shows that while GMA 7 has long been a listed company, it is not necessarily public. As disclosed in an ownership filing, the public own only the equivalent of 7.92 percent of the TV conglomerate’s common shares and only 0.96 percent of the preferred shares. Perhaps management has a ready explanation for this.)
1.6M shares for issuance
If the percentage were to be based on the entire issued capital stock, which consists of the fully issued 7.5 billion preferred shares and 5 billion common shares, who among GMA 7’s significant stockholders would have given way to Ang’s entry?
If no one among them was willing to part with his holdings, then Ang, or any other buyer or buyers interested in buying into GMA 7, could eye 1.63 billion unissued common shares available for sale. This unissued block represents 32.7 percent of GMA 7’s 5 billion authorized common shares, but only 13 percent of the TV group’s capital stock of 12.5 billion shares.
With this minority stake, Ang would have found himself with only one seat on the nine-person board of GMA 7, unless the Duavit-Gozon-Jimenez triumvirate allowed him more. Based on GMA 7’s voting capital of 10.86 billion shares, including more than 7.5 billion preferred shares, the two independent directors of GMA 7 are even more fortunate than Ang.
As independent directors of GMA 7, Jaime Laya and Artemio Panganiban own 294,000 common shares and one nominal common share, respectively. Has there been no law on the appointment of independent directors, they would not have made it to GMA 7’s board or of any listed company.
30% of outstanding capital?
Generally, the public rely on disclosures when they invest in certain stocks. They did the same when they curiously watched the ongoing talks between the Duavit-Gozon-Jimenez group and Ang on the latter’s acquisition of GMA 7 shares.
Then the talks suddenly collapsed when the sellers backed off from the negotiations. Again, the public had only the postings on the website of the Philippine Stock Exchange for guidance. What happened? Then came the following disclosure dated June 22:
“The Company has been informed by its majority stockholders [Jimenez Group, Gozon Group and Duavit Group] that the negotiation with Mr. Ramon S. Ang on the sale and purchase of a minority equity interest in the Company’s outstanding capital stock is now deemed terminated.”
If the public were to be guided alone by the wordings of this filing, then they would have interpreted this to mean any one of the three existing significant stockholders or perhaps all of them would be the sellers. As sellers though, they would only be selling to the extent of “30 percent equity,” which by this posting should refer to “outstanding capital stock.”
By capital stock, the public could have interpreted this to refer to both preferred and common shares, which GMA 7’s triumvirate control up to 92.08 percent and 99.04 percent, respectively. Had the three groups allowed Ang to partially buy them out, they would still have retained their control of 80.56 percent.
The information that the public would have loved to hear or read was if any of the members of GMA 7’s triumvirate had ever thought of giving up even a portion of their holdings? None of them would surely be selling. Why give up something that gives them the prestige of owning a TV group of communications companies led by a TV station, which is Channel 7, and premier radio station DZBB?
At P6.40 per share, GMA 7 could have grossed P9.2 billion from the sale of 1.44 billion common shares. This sale, which is based only on market price, would have expanded the TV group’s outstanding common shares to 4.8 billion which, when added to 7.5 billion preferred shares, would be equal to outstanding capital stock of 12.3 billion shares. It also could have increased its additional paid-in capital to P9.4 billion.