Digitel shareholders seek higher price

Several minority stockholders of Digital Telecommunications Philippines Inc. (Digitel) are demanding a higher price for the shares they hold before selling out to the company’s new owner, Philippine Long Distance Telephone Co. (PLDT) led by Manuel V. Pangilinan.

PLDT’s mandatory tender offer for Digitel shares held by small investors, triggered by the acquisition of 51.55 percent of the latter’s stock, began in December 2011 and will end later this month.

Dioceldo Sy, Edmund Sia, Gary Lim and Arsenio Tan, in a joint complaint, accused PLDT of trying to defraud the investing public by trying to acquire Digitel shares from small investors at a price of P1.603 each.

PLDT completed its acquisition of Digitel last October at a total price of around P69 billion paid in PLDT shares at a price of P2,500 each. However, only a fraction of this amount was for the purchase of Digitel’s shares.

Bulk went to pay for Digitel’s liabilities that were all held by its former parent company JG Summit Holdings Inc. These in turn could be converted into Digitel shares. These were in the form of convertible bonds worth P29.8 billion and inter-company advances worth P34.1 billion, representing the money poured in by JG Summit to the bleeding telco.

All in all, Digitel was valued at P1.603 per share, which is the same price being offered by PLDT to minority shareholders.

Nonetheless, the four complaining shareholders said they were deceived. They said regulators approved PLDT’s acquisition of Digitel shares at P69.1 billion, but stressed that the company’s liabilities should not be included in the computation.

“The zero coupon convertible bonds… should not be included in the computation of the total number of shares by merely presuming its conversion because in reality, the said bonds have not yet been converted into shares, and cannot yet be converted into shares until 2013 and 2014,” the four said in a complaint before the Securities and Exchange Commission last month.