Today is the deadline for minority shareholders of publicly listed Liberty Telecoms to signify their interest to be bought out of the company by its new shareholders, Globe Telecom and PLDT. Normally, such a deal would be a no-brainer, but that hasn’t been the case here.
To recall, Liberty Telecom was acquired by both telecommunication giants from San Miguel Corp. for the valuable 700 megahertz frequency it held—a key asset that is essential in rolling out high-speed internet services on mobile devices.
Together, Globe and PLDT paid P70 billion for San Miguel’s telco assets, leading to expectations that Liberty’s smaller stockholders would also benefit from the windfall.
Biz Buzz learned that there were some stock market speculators who positioned themselves in Liberty, buying shares early on, hoping to make a killing whether San Miguel pushed ahead with its telco plans or from the sale to Globe and PLDT.
Of course, nothing’s wrong with that because that’s how money is made in the stock market.
But what if we told you that one of the biggest minority shareholders of Liberty Telecom is a stockbrokerage firm which, from all indications, was hoping to cash in on the expected price appreciation?
Again, there’s nothing wrong with stockbrokerage firms buying stocks for themselves. As long as the stockbrokerage doesn’t get into a conflict of interest situation vis-a-vis its clients, there’s no issue with that.
But the situation isn’t as black and white as that. Biz Buzz learned that one stockbrokerage in particular amassed quite a number of Liberty shares ahead of the Globe/PLDT-San Miguel transaction in the hopes of making a quick buck.
The shocker came when Globe and PLDT disclosed a tender offer where they would buy out minority shareholders at P2.20 a share—a price that was apparently much lower than what this stockbrokerage firm and minority stockholders were expecting.
Two other brokers with large holdings in Liberty kept their peace. But not this other brokerage firm which took a public stand that Globe and PLDT should pay much more than P2.20 for each Liberty share. How much more? More than double what Liberty’s new owners were offering, the firm told its clients.
The question is whether this brokerage firm amassed holdings in Liberty for itself or did it advice its clients to accumulate Liberty. Now it is either clearly disappointed with the P2.20 offer price (especially if it bought its shares at a higher price) or is losing face for having pushed a highly speculative investment.
In any case, Biz Buzz got to see just how much stock this brokerage firm holds in Liberty: More than 8 million shares. Ouch. No wonder the company is upset and is pushing for a higher tender offer price. Daxim L. Lucas
Human error
A SURVEY was conducted among banks to assess the impact of the interest rate fixing error made a few months ago by fixed income trading platform Philippine Dealing Exchange Corp. (PDEx). The good news is that no bank was seriously affected by the error, which had occurred from June 3 to July 18, 2016, in the benchmark rates published by PDEx. Or at least, no bank admitted to losing tons of money as a result of the errors, based on an informal survey initiated by the Bankers Association of the Philippines.
As to the source of all the trouble, it was the fault of the person tasked to review the rates. The numbers were not updated in the interest rate used as the basis for computing interest rate benchmarks, such as on the 91-day rate, just when the central bank started implementing its interest rate corridor. The “typo” error in the extrapolation resulted in a 0.8753-percent upward interest rate differential from the correct rate. It was a result of “human error,” a source said.
Asked whether any head has rolled, the source said the person responsible has already received a “strongly worded reprimand letter.” It could have been a different story if the error had cost some banks a lot of money, which, in turn, would have made them demand for just compensation from PDEx. Doris Dumlao-Abadilla
In his hands
IT HAD a great start as the country’s first universal bank, but United Coconut Planters Bank has not been able to keep pace with its peers over the last few decades, no thanks to the coco levy fund dispute.
Now, however, its professional managers believe they have found the solution that will allow the bank (which now prefers to be simply called “UCPB” to distance itself from the coconut industry controversies) to take advantage of the strong economy and start growing again.
The UCPB brass—led by its president and CEO Jeronimo Kilayko—has given fresh impetus to a capital-raising plan that should raise at least P20 billion in new equity for the financial institution. And if marketed properly and accepted by the investing public, the bank thinks that it could raise as much as P37.5 billion to bring its total capitalization to P40 billion.
At this level, UCPB would once more have the muscle to compete with the big boys of the Philippine banking. UCPB will be able to put up more branches (it has 233 at the moment) and be able to lend out more high-margin consumer loans, which is all the rage in the financial sector nowadays, thanks to the strong economy.
More importantly, the fresh capital would also allow UCPB to “buy out” the government-run Philippine Deposit Insurance Corp.—which came to the bank’s rescue with P12 billion in capital notes a few years ago—from its board.
The capital-raising plan was approved and ready to go under the previous administration, but time ran out and the scheme was shelved.
But Biz Buzz learned that the man who holds true power over UCPB’s fate right now is Finance Secretary Carlos Dominguez III. The de facto head of the Duterte administration’s economic team has the final say on all affairs involving state-run financial institutions and is not afraid to stop deals that he feels don’t make sense (stopping the merger between Land Bank of the Philippines and Development Bank of the Philippines is one example).
Bank officials are crossing their fingers that the finance secretary will give his imprimatur to the plan. Daxim L. Lucas
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