Will Gokongwei-Salim partnership last?

Emeterio Sd. Perez

Emeterio Sd. Perez

INSIDERS’ trades. On February 11, Victor Consunji, director, president and chief operating officer of Semirara Corp., bought 12,390 Semirara shares at P340.168 each equals P4.21 million. Semirara is a subsidiary of DMCI Holdings Inc., which owns 200.65 million Semirara shares, or 56.32 percent. Consunji is also a member of DMCI board.

On February 4, Dennis Andreaci, American, executive vice president for gaming of Bloomberry Resorts Corp., grossed P2.88 million from the sale of 335,717 Bloomberry shares in four trades—90,000 at P8.60 each equals P774,000; 67,700 at P8.59 each equals P581,543; 178,000 at P8.58 each equals P1,527,240; and 17 at P4.50 each equals P76.50.

Anscor Consolidated Corp. (ACC) is a wholly owned subsidiary of A. Soriano Corp. (ASC), which is listed. On February 11, it bought in the open market 36,900 ASC shares at P6.60 each. The acquisition increased ACC’s holdings to 1.24 billion shares, or 49.46 percent, an ownership that could, sooner or later, top 50 percent. When this happens, it is up to Securities and Exchange Commission (SEC) officials to define for the public the relationship between the two companies.

From 43 percent to 33 percent. Preferred shares issued by Travellers International Hotel Group Inc. are no longer convertible into common but are still “reissuable at the option of the corporation.”

The change is contained in an amendment to the company’s Articles of Incorporation, which was approved by the company’s board on February 12. In a posting on the website of the Philippine Stock Exchange, the company said that it will submit on February 27 for approval by the SEC the proposed amendment.

As of December 31, 2013, foreigners owned 6.95 billion Travellers common shares, or 43.51 percent, exceeding the legal limit of 40 percent. With the silence of the SEC over the foreign ownership violation, Travellers is already compliant with the 40-percent limit by its issuance of 1.67 billion preferred shares to foreigners and 8.33 billion to Filipinos, thereby diluting foreign ownership in the casino group to 33.18 percent.

Gokongwei-Salim team up. Businessman John Gokongwei Jr. and his family did not lose Digital Telecommunications Philippines Inc. (Digitel). They retained partial ownership in Digitel by getting paid in common shares in Philippine Long Distance Telephone Co. for their controlling ownership in Digitel. Their ownership now at a little over 10 percent in PLDT entitled them to a seat in PLDT board taken by the James Go.

Thus began an alliance between Gokongwei and the Salim group who owns First Pacific Co. Ltd. of Hong Kong, but is represented in the Philippines by Manuel Pangilinan.

Then, JG Summit, which is the listed holding company of the Gokongwei family, became a significant stockholder of Manila Electric Co. by buying 305.69 million Meralco shares, equivalent to 27.12 percent, from San Miguel Corp. SMC grossed P71.837 billion from the transaction, a lot of money for financing its expansion and diversification into other potentially profitable ventures.

Dilution. Then the Supreme Court ruled that PLDT has been in violation of the 40-percent foreign ownership limit two years ago. To comply with the law, PLDT issued 150 million voting preferred shares, thereby effectively diluting JG Summit’s 8.07-percent holdings to only 4.75 percent.

As a result of the issuance of voting preferred shares, the Gokongweis lost the numbers game and their nominee, James Go, had to give up his seat in the board without a fight. They could have prevented the dilution of their holdings had they bought voting preferred shares. Were they not allowed to exercise their preemptive right to buy in proportion to their common shares holdings?

In Meralco, with their 27.12 percent holdings, the Gokongweis are entitled to three seats in the board vacated by the nominees of San Miguel Corp. Their holdings may remain at 27.12 percent unless there would be a repeat of PLDT’s ownership issue.

First Pacific, on the other hand, is in control with its ownership of 49.96 percent.

By the number. Is it possible for the Gokongweis to at least equal First Pacific’s ownership in Meralco?

If we go by the numbers, the answer is yes but could be very difficult. The question is who among the small stockholders including Government Service Insurance System, Social Security System, Home Development Mutual Fund, Philippine Health Insurance Corp. and Social Security System, will be willing to sell at a time when the stock market has not been doing well.

Meralco was last traded at P256 on February 12. It hit a 52-week high of P397.

Will the Lopezes sell their remaining minority stake in Meralco to JG Summit? After all, they used to be partners in Philippine Commercial International Bank many years ago when the late Eugenio Lopez Jr. teamed up with the Gokongweis in taking over PCIBank.



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