IF businessman Ramon Ang were to finally buy into GMA Network Inc., his acquisition would result in the network’s ownership profile that would show three groups controlling 90 percent of the company’s outstanding common shares. At the same time, GMA 7 would allow the public to own the equivalent of a 10 percent ratio, which is the minimum public ownership required under the market rule.
In arriving at this ratio, Due Diligencer assumed the outstanding common shares of GMA 7 at 4.801 billion, which should result from the entry of a new significant stockholder. Ang, the buyer, is the vice chairman, president and chief operating officer of San Miguel Corp.
Since GMA 7 has many corporate stockholders, Due Diligencer is presenting only the theoretical ownership profile, which would show the Gozon-Jimenez family and the Duavit group each owning 1.4 billion common shares (or 1,440,448,714 to be exact), the same number of common shares which, computed at 30 percent, GMA 7 planned to sell to Ang. This would leave the public owning 10 percent or 480.15 million common shares.
At this point, there would be no problem in having three significant stockholders combining for 90 percent of the resulting outstanding common shares. What would be laudable in this theoretical ownership composition is that the public wouldn’t be ignored but they would be allocated the required 10 percent minimum ownership, making them the fourth group of significant stockholders of a listed company.
(It is sad to say despite their 10-percent ownership, the public would continue to be passive stockholders of GMA 7 as in other listed companies, they would not enjoy representation to the board. Much luckier are the outsiders who hold only nominal shares but given board seats as independent directors but are nominees of the majority or controlling stockholders. As such, they are either legal advisers or business consultants.)
How about the board? As owner of 30 percent of the outstanding common shares of GMA 7, how many seats would Ang be entitled to elect? When computed, he should get 2.7 seats of the network’s nine-man board. Is this computation correct? How about the voting preferred shares that are all owned by the Gozons-Jimenezes and the Duavits?
Recomputed based on total outstanding capital consisting of 10.861 billion shares, including 7.499 billion voting preferred shares, Ang’s 1.440 billion GMA 7 common shares would be diluted to 13.263 percent from 30 percent.
With the missing numbers provided by Due Diligencer, it would appear GMA 7’s present nine-man board would be too small for three groups of stockholders, especially if one of them – the Gozon-Jimenez family – would own more than 30 percent. With the appointment of two independent directors, GMA 7’s three significant stockholders would be dividing among them seven seats that would give each of them 2.333 seats.
These computations suggest the need for GMA 7 to increase the number of its directors to, say 11, or not necessarily to facilitate the division of the board. Rather, this is to make the three nominees of each group more effective as members of the policy-making body.
GMA 7 is a big success today because of the effective expertise provided by the Gozons, the Jimenezes and the Duavits. But it may need more: Mr. Ang would provide the kind of management that enabled him and his team to steer San Miguel to new heights such as making SMC not known only for its Pale Pilsen but more importantly as global company.
This early, the Lopezes, who own ABS-CBN Corp., must have already been plotting new strategies in preparing their network conglomerate for a bigger and more effective competitor in GMA 7, which is expected to grow even bigger. To them, there is no room for complacency should GMA 7’s stockholders and Ang finally agree on merging their resources such as money, which to some would be logistics, and management expertise.