METRO Pacific Investments Corp. (MPIC) describes itself “as a holding company for investments in water utilities, toll roads, electricity distribution, healthcare services and light rail.” The list of MPIC’s units engaged in these industries is too long to be accommodated in this piece so I suggest that readers of The Manila Times go over the company’s financial filings instead, if they are interested.
Our readers are advised also to read a Due Diligencer piece on “First Pacific’s local affiliates and their Filipino stockholders,” which appeared in this space on May 5, 2015.
From it they would learn how foreigners such as the Indonesian-owned First Pacific Co. Ltd. are able to go around the 40-percent limit on foreign ownership in companies engaged in nationalized and partly nationalized industries.
As shown in my last year’s Due Diligencer piece, First Pacific has so efficiently hidden its control of all its subsidiaries through various layers of ownership by attributing Filipino citizenship to its local units that it uses as corporate stockholders.
It is up to our readers to judge for themselves if MPIC is not, in fact, a subsidiary of First Pacific. Please don’t get influenced by Due Diligencer of May 5, 2015. Just make your own conclusion based on your readings of MPIC’ ownership postings.
Is MPIC a subsidiary of First Pacific?
Yes, it is, if 50 plus one percent, or more, which is the majority, of its outstanding capital stock is owned by First Pacific; if it is less than 50 percent, it is only an affiliate. (Note: The use of majority in this piece has nothing to do with the Supreme Court’s 7-5-3 recent application of numbers which, to Due Diligencer, was not a majority decision but only a plurality. No. I am not about to join the debate either for or against any candidate. This is only to contribute my own interpretation of the word “majority.”)
To know the answer, our readers only have to read the company’s public ownership report (POR) as of Dec. 31, 2015. A POR computes the ownership of public investors in every listed company.
The POR of Metro Pacific credited foreigners with ownership of 9.67 billion shares, or 34.7 percent, which apparently boosted the holdings of the public to 13.3 billion MPIC shares, or 47.7 percent.
This means that the 14.5 billion MPIC shares which represent 52 percent of outstanding common shares are held by Metro Pacific Holdings Inc. (MPHI) but are not among the foreign-owned MPIC shares.
As defined by MPIC, its majority stockholder, which is MPHI, is a Filipino-controlled corporate stockholder.
By the way, the 9.67 billion MPIC shares, or 34.7 percent, held by foreigners are lodged with PCD Nominee Corp. which, in turn, listed various stockbrokers either as record or beneficial stockholders.
Foreign banks also hold PCD-held MPIC shares for their clients. Among them are Deutsche Bank-Manila, which holds for foreigners 4.9 billion MPIC shares; The Hongkong and Shanghai Banking Corp., 2.64 billion MPIC shares; and Citibank N.A., 969.85 million MPIC shares.
Not only common shares
Intentionally or not, MPIC has omitted preferred shares in wrongly attributing to the public the ownership of 47.72 percent of its outstanding capital stock. To correct the misimpression that said omission may have imposed on the public, I am doing my own computations, this time based on the company’s “entire outstanding capital stock.”
“Entire outstanding capital stock,” as used here, consists of MPIC’s 26 billion common shares and 5 billion Class A preferred shares. By adding them, the company should have a total of 31 billion outstanding shares.
Of 31 billion shares, MPHI — which MPIC classifies as a Filipino company when it is known to be owned by the First Pacific Co., Ltd. of Indonesia — holds a total of 19.52 billion shares, or 62.88 percent (14.5 billion common shares plus 5 billion preferred shares). Together with MPIC shares held by foreigners but lodged with PCD Nominee Corp., aliens effectively control 29.2 billion, or 94 percent.
How come MPIC claimed in a post on the website of the Philippine Stock Exchange that foreigners are allowed to own only up to 40 percent of its outstanding common shares? I don’t have the answer except to credit MPIC’s claimed ownership profile to the wisdom of the Indonesians’ Filipino lawyers.
Perhaps, the composition of MPIC’s 15-person board would tell us also how efficient it is for having lawyer Antonio A. Picazo and Chief Justice Artemio V. Panganiban among its directors. Panganiban is one of MPIC’s four independent directors. The three others are Washington Z. Sycip, Edward S. Go, and Lydia B. Echauz. Picazo is a regular member of the board.
Of the four so-called independent directors, only Sycip holds the required nominal share. Panganiban owns 250,001 MPIC shares.
On March 14, Go and Echauz exercised their right under MPIC’s executive stock option plan and bought an additional one million shares each at P4.60 per share. The acquisitions increased their holdings to 1.03 million shares and 1.5 million shares, respectively.
On March 14, MPIC opened trading at P6.02, hit a high of P6.03, and dropped to a low of P5.94. At the stock’s closing price of P5.97, Echauz and Go enjoyed a discount of P1.37 per share, or 22.95 percent. On the same day, Manuel V. Pangilinan, MPIC chairman, increased his MPIC holdings by 3.25 million shares from a nominal share to qualify him for election to the board.
Incidentally, Pangilinan, Go and Echauz made timely acquisitions of more MPIC shares way ahead of the March 30 record date for eligibility to the P0.61 per common share dividend.