• SEC takes public investors for granted



    WHERE were the members of the five-person regulatory body of the Securities and Exchange Commission when Liberty Telecoms Holdings Inc. (LTHI) informed them of the results of an offer to buy out the public through a posting on Nov. 4 on the website of the Philippine Stock Exchange?

    The question is raised here in view of the planned delisting of Liberty Telecoms. Perhaps, the five top SEC officials, who compose the commission proper, were “missing from action”. Were they afraid of the owners of Globe Telecom Inc. and PLDT Inc.?

    There would only be questions without answers and these would haunt PLDT and Globe Telecom, two companies that used to fight each other in the past but have become temporary allies for the sake of convenience. Remember their battle over the sale of Bayan Telecommunications Inc. to Globe Telecom by the Lopez group?

    Controlled by foreigners
    PLDT and Globe Telecom, the only remaining stockholders of Liberty Telecoms with 50 percent each of outstanding common shares, are both controlled by foreigners.

    Based on outstanding common shares, PLDT is a subsidiary of Indonesian-owned First Pacific Co. Ltd. while Singapore Telecom International Pte. Limited controls 47.19 percent of Globe Telecom.

    It is true that PLDT Beneficial Trust Fund holds 150 million PLDT voting preferred shares but it does not exercise direct voting rights over them. Instead, First Pacific does and even has assumed the power to appoint the three independent directors.

    First Pacific, though, allowed PLDT’s minority stockholders to elect their own nominees. It cannot ignore the Japanese-owned NTT group that is entitled to two seats while JG Summit Holdings Inc. of the Gokongwei group and the Yuchengco group are entitled to one each.

    Since First Pacific controls PLDT board with nine out of 13 seats, it indirectly owns 50 percent of Liberty Telecoms, which, as mandated under the law, is limited to owning a maximum of only 40 percent.

    Public ignored
    What happened to the public who were listed in a public ownership report as owners of 116.257 million PLDT common shares, or 53.81 percent? Being the regulatory authority, only the SEC has the answer.

    Going back to the question, it seems the members of the SEC’s five-person regulatory body did not assert their power over the sale of Liberty Telecoms and its telecom assets. Perhaps, they were too busy to review the P2.20 per share price, which some of the public found too low to attract them to sell their few holdings.

    It may be too late to ask SEC officials why they ignored the public because PLDT and Globe Telecom have already finalized their takeover of Liberty Telecoms and decided to take the company private again.

    Liberty Telecoms listed its shares on Oct. 17, 1994. The stock recorded 52-week high of P5.20 but was last traded at P1.56 on Nov. 3.

    Tender report
    The last filing dated Nov. 3 was posted Nov. 4 on the PSE website. It was written on a stationery of Liberty Telecoms and addressed to the “Disclosure Department” of “The Philippine Stock Exchange. Ms. Marsha M. Resurreccion, head of PSE issuer regulation department; and Mr. Valeriano B. Zuno 3rd, officer-in-charge, disclosure department.

    Liberty Telecoms wrote:
    “In relation to the completion of the tender offer (the “Tender Offer”) conducted by Vega Telecom, Inc. (“VTI”) for all the remaining outstanding common shares of stock of Liberty Telecoms Holdings, Inc. (“LIB” or the “Company”) and further to the amended Tender Offer disclosure made by the Company yesterday, 2 November 2016, the Company hereby announces that VTI is in the process of securing approval for the block sale of the tendered shares which is intended to be executed tomorrow, 4 November 2016.

    “Following approval and execution of the block sale, the Company’s public float will decrease from 12.82 percent to 4.55 percent, which is below the minimum public ownership required by the Philippine Stock Exchange (“PSE” or the “Exchange”).

    “Hence, pursuant to the Amended Rule on Minimum Public Ownership, the trading suspension on LIB’s shares will be implemented immediately.

    “Furthermore, as we have stated in our previous disclosures, the proposed date of the voluntary delisting of LIB from the Exchange is on November 21, 2016.

    “Please be guided accordingly.”

    ‘Semblance of fight’
    The disclosure, which was in the form of a letter, was unsigned, suggests the victory of a listed company over the public.

    Despite opposition, PLDT and Globe Telecom went on to finalize their P2.20 per share buyout of the public of their Liberty Telecoms shares via two special block sales.

    Again, where were SEC chairperson, Teresita J. Herbosa, and the other four commissioners when the said sales were taking place? The answer could be that as securities industry regulators, they enjoyed watching from the sidelines than protecting the public.

    To ordinary investors, who are non-entities as far as the SEC is concerned but who trade on listed shares, Herbosa and company would put up only a semblance of fight, rest their case without fighting, and savor their (SEC officials) loss.

    What matters more to SEC could be the interest of listed companies and not the public that enable family-owned stock corporations to list their shares on PSE and pay less taxes when issuing stocks to its owners.

    What a sure way of reducing tax payments!



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