AS the buyers of the telecom assets of San Miguel Corp. (SMC), PLDT Inc. and Globe Telecom Inc. have already disclosed the “required filings” thru postings on the website of the Philippine Stock Exchange. They paid SMC a total of “P52,080,764,982 inclusive of outstanding advances and the assumption of liabilities of Vega and its subsidiaries amounting to P17,021,535,948.”
The use of a pair of quotation marks for “required filings” is intended for the information of the public who have yet to be told how PLDT and Globe will divide between them their newly acquired telecom assets.
In other words, which will eventually be owned by PLDT and which will go to Globe. Any disclosure in response to this will definitely benefit the public who will know how to trade their holdings in Liberty Telecoms Holdings Inc.
Both PLDT and Globe have already made public their intention to buy out the public stockholders of their few Liberty Telecoms shares. Unluckily, the intention to buy did not include the tender price per.
Vega’s 97.461% control
Liberty Telecoms has an authorized capital stock of 6.8 billion shares divided into 1.45 billion common and 5.35 billion voting preferred shares. Of the authorized capital stock, 6.538 billion shares are outstanding of which 1.294 billion are common shares and 5.244 billion preferred shares.
Vega Telecom Inc., a wholly owned subsidiary of SMC, owns 1.128 billion Liberty Telecom common shares or 87.18 percent of 1.294 billion outstanding common shares and 17.253 percent of 6.538 billion outstanding capital stock. It holds Liberty Telecoms’ entire 5.244 billion outstanding preferred shares equivalent to 80.208 percent of 6.538 billion outstanding capital stock.
To sum up, Vega controls 6.372 billion shares equivalent to 97.461 percent of the 6.538 billion capital stock, leaving the public with 136.555 million common shares or 10.56 percent of common shares but only 2.089 percent of 6.538 billion outstanding capital stock.
In July 2015, SMC consolidated the ownerships of Liberty Telecoms’ preferred shares under Vega Telecom. The process primarily involved Vega Telecom’s acquisition of preferred shares held by SMC’s three subsidiaries such as West Bay Holdings S.P.C., 1.954 billion shares divided into 426.8 million common shares and 1.527 billion preferred shares; White Dawn Solution, 1.206 billion preferred shares; and wi-Tribe Asia Limited, 175.113 million preferred shares.
Vega Telecoms spent P5.746 billion for these acquisitions. It paid West Bay P3.463 billion – P938.96 million for 426.8 million common shares or P2.2 per share, and P2.524 billion for 1.527 billion preferred shares. It spent P1.993 billion in buying White Dawn’s 1.206 billion preferred shares, and P289.485 million for wi-Tribe’s 175.113 million preferred shares.
In acquiring a total of 2.908 billion Liberty Telecoms’ preferred shares, Vega Telecoms paid P4.807 billion, which translates to P1.653 each.
Tender to buy
After these acquisitions, Globe Telecom and PLDT would end up owning 6.372 billion Liberty Telecoms shares of which 1.278 billion are common shares and 5.244 billion preferred shares.
At this point, it may not be easy to determine the price per share that Globe and PLDT would set in buying out the public stockholders of their holdings in Liberty Telecoms. Will P52.081 billion be divided by 1.278 billion Liberty Telecom outstanding common shares which would result into P40.752 per share? Or will it be P52.081 billion divided by Liberty Telecom’s 6.372 billion outstanding capital stock which would give you P8.173 per share.
How about the P17.022-billion liabilities assumed by the two buyers and which were part of the P52.081-billion deal? Should the amount be deducted from P52.081 billion to get the gross price of Vega’s holdings in Liberty Telecom? The acquisition price would drop to P35.059 billion (P52.081B minus P17.022B).
Dividing P35.059 billion by 1.128 billion Liberty Telecom common shares owned by Vega Telecom would be equal to P31.081 per share. How about P35.059 billion divided by 6.372 billion shares owned by Vega Telecom in Liberty Telecom? The quotient would be P5.502 per share.
The answers to the questions will be known only when PLDT and Globe Telecom or even SMC shall have made their final filings detailing the P52.081-billion transaction. Meanwhile, the public have to contend with piecemeal filings that do not tell them the specifics, more importantly, the price per Liberty Telecoms share in a tender to buy the shares held by the public.
A suggestion though for the public to have a glimpse of SMC’s potential profit from the sale of its assets for P52.081 billion: read the financial filings in the first quarter of 2016. The entries under capital deficiency will tell them why SMC decided to sell Vega Telecom, which, in turn, is the majority stockholder of Liberty Telecoms.
Even if the first quarter financial filing is not audited, the numbers tell the story of a losing company with accumulated deficit of P11.478 billion. Luckily for Liberty Telecoms, it had P6.537-billion capital and additional paid-in capital (APIC) of P3.992 billion that reduced its capital efficiency to P926.505 million.
APIC refers to the premium over par value resulting from the issuance of shares. In the case of Liberty Telecoms, most if not all of its APIC came from the issuance of preferred shares.