Mark Villar’s ‘conflict of interest’?

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EMETERIO SD. PEREZ

EMETERIO SD. PEREZ

VISTA Land and Landscapes Inc. (VLL) is the listed property company of former Senate President Manuel Villar Jr. and his family. Of the company’s 12,924,267,276 (12.92 billion) outstanding common shares, 8,538,740,614 (8.5 million) shares are listed on the Philippine Stock Exchange (PSE).

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Mark Villar, who has been named by presumptive President Rodrigo Duterte as his secretary of the Department of Public Work and Highways, owns 200,000 VLL shares, according to a company posting.

At P5.08 per share – the stock’s closing price on Monday – Villar has paper wealth of P1.016 million, which is not much to anger the public for his appointment as public works secretary.

Is there no conflict of interest between the new government position of the young Villar and his being a member of the family that owns Vista Land? Duediligencer is not making any conclusion or judgment on the matter but is presenting the following information culled from VLL’s filings.

Family control
THE public may have difficulty finding any new expansion or additional real estate or property investment made by the Villar family. The reason may be obvious to neutral observers of the stock market – not all business interests of the Villar family are listed.

The word “public” does not refer only to individual investors who trade in PSE-listed stocks but encompasses all others even if they may not be interested at all in the stock market.

Yes, it may not be easy for the public to decipher any expansion in the property ownership of the Villars from Luzon to Visayas and Mindanao for three reasons: 1.) Only the 12.9 billion outstanding common shares of Vista Land and Landscapes Inc. are listed; 2.) The company’s corporate stockholders are closed corporations; 3.) As such, they are not covered by the full disclosure rule that governs the stock market.

The Villars own two companies that serve as the family’s ownership conduits in Vista Land. Fine Properties Inc. holds 5,549,360,292 (5.5 billion) common shares, or 42.929 percent of outstanding common shares, and 34.198 percent of total voting shares; and 3.3 billion preferred shares, or 20.337 percent of total voting shares. Althorp Holdings Inc. owns 1,235,292,469 (1.2 billion) common shares, or 9.556 percent of outstanding common shares, and 7.613 percent.

Stockholders’ wealth
A posting on the PSE website showed VLL’s last traded price of P5.08 on Monday. This should give Fine Properties and Althorp Holdings paper wealth of P28,190,750,283 (P28.19 billion) and P6,275,285,742 (P6.28 billion), respectively.

Individually, two Villars are listed among VLL’s insider stockholders and members of management. These are Manuel B. Villar Jr. and son Manuel Paolo A.Villar. The father holds 8,179, 900,520 (8.18 billion) common shares, or 63.278 percent of outstanding common shares, of which he directly owns 293,968,986 common shares, and indirectly owns 7,885,931,534 common shares. Manuel Paolo directly owns 222,796,324 (222.8 million) common shares, or 1.723 percent of outstanding common shares, and 1.373 percent of outstanding total voting shares.

At P5.08 per share, the 8.18 billion common shares give Villar the father a paper wealth of P41,553,894,641 (P41.55 billion). On top of this paper wealth, he has voting rights over the 3.3 billion preferred shares that he holds, which Vista Land issued on March 21, 2013 to Fine Properties.

Manuel Paolo is much less rich than his father. His market wealth amounts to P1,131,805,325 (P1.13 billion.) Like Mark, the public work secretary-designate, he also shares in his family’s holdings in Vista Land.

Voting preferred shares
Vista Land said in a company filing that the “3.3 billion new preferred shares” came from the “unissued portion of its authorized capital stock at par or an aggregate issue price of P33 million.

The Villars showed how to retain control of a listed company at the expense of the public. This time, the word “public” refers to individual investors who trade in listed stocks.

By ignoring the right of VLL’s public stockholders, Villar the father and former senate president, has succeeded in issuing 33 billion voting preferred shares to himself by using a conduit called Fine Properties.

While the public has to contend with market prices, the Villars, as the controlling stockholders of Vista Land, have only to create 3.3 billion preferred shares and sell them to the father at a cost of P33 million or at only P0.01 per share.

Whatever happened to the stockholders’ preemptive rights over issuance of new shares? Well, like a few other listed companies, the Villars may have found a way to go around market rules. More researches on Villars’ property exposures in my next column.

esdperez@gmail.com.

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