AFTER 18 years of uncertainty as a result of its financial failure, Victorias Milling Co. Inc. (VMC) may be on its way to recovery, thanks mainly to the Securities and Exchange Commission’s generosity in protecting it from creditors running after it.
There is, however, a running feud between two conglomerates with exposure in the sugar milling complex. The fight between businessmen Lucio Tan, who controls LT Group, and Andrew Gotianun, who owns Filinvest group, is worth watching. We also advise the public to be more vigilant as to how this squabble would affect their VMC shares.
How long the LT and the Filinvest groups would persevere in a legal battle that started last year at the SEC could be anyone’s guess. To paraphrase someone else’s quote, “your guess is as good as mine.” (When I interviewed the late Jaime Cardinal Sin many years ago, I asked him how he would assess martial law in the Philippines, his response was “Your assessment is as good as mine.”)
Victorias may be considered lucky. Had it failed to obtain debt relief from creditors in 1997, when it reported total assets of P7.125 billion against total liabilities of P5.069 billion, it would have lost its assets to its lenders.
As in any rehabilitation proceedings, banks wait to pounce on its assets. VMC, known to the old folks as Vicmico, then deemed too big to fail, disappointed the banks including Eastwest Banking Corp., the bank unit of Filinvest group.
A posting on the website of the Philippine Stock Exchange showed VMC owed Eastwest Bank P1.1 billion. The bank, which has been reported years ago to have offered to rehabilitate Victorias Milling, was among the creditors that were to convert into equity part of their past-due loans. It was listed in one filing as owner of 5.6 percent of the sugar central.
This piece it not only about the Gotianun’s holdings. This is also about the company and the control of Victorias by groups associated or identified with the LT group. What happened to the other bank creditors? Have they been bought out or eased out and by whom?
Being listed and public company, Victorias, which is now controlled by Mr. Tan, has so much more to disclose to the public than what it had already made available to them thru PSE postings. The company and its rehabilitation team, should tell the public how Mr. Tan ended up in control of the board thru his nominees.
What happened to the public and the Gotianun’s holdings? If Victorias is public as it claimed in an ownership filing that public investors own 942.843 million shares, or 39.82 percent, then who represents them in the 12-person board? Who among the company’s insiders would be brave enough to tell the public by squealing on their patrons?
Aside from the question on public representation, there is so much more the sugar miller has to explain. For instance, in the beginning, it has sought the conversion of debts into convertible notes only to deprive the Gotianuns such opportunity to increase its holdings. Was there a selective application of the provision on debt-to-to-equity conversion? If so, then the public should have been properly informed?
For the sake of the public, whatever filings with the SEC has been made by Victorias Milling should also have been posted on the PSE website. But as of yesterday, it had nothing to show for disclosure on the brewing controversy except footnotes in its annual filings. What the company has so far has disclosed was the exchange of communications in one report between it and Eastwest Bank on the latter’s demand that it be allowed to convert into equity the convertible notes that it owns.
The public has the right to know. With three years more to go before it winds up its extended rehabilitation, Victorias Milling should abide by the ART of full disclosure where A stands for accuracy, R for relevance and T for transparency.
By the way, will Victorias Milling identify for the public the owners of its foreign stockholders? Are these foreign stockholders also partners of Mr. Tan enabling him to control the board to the exclusion of what the company and its rehabilitation team probably deem as antagonistic interest?