SEC orders Globe, PLDT to defer closing of Liberty tender offer

The Securities and Exchange Commission has directed the duopoly that now controls Liberty Telecoms Holdings Inc. to defer the tender offer and to submit more information about the controversial reassignment of frequencies that had depressed the tender offer price.

The tender offer priced at P2.20 a share was supposed to expire on Sept. 21 at 5 p.m. and cover up to 165.88 million common shares, or 12.82 percent of the issued and outstanding common stock of the telecom company formerly owned by conglomerate San Miguel.

In a letter dated Sept. 16, the SEC Markets and Securities Regulation Department (MRSD) directed Vega Telecom Inc.—now jointly owned by PLDT Inc. and Globe Telecom—to defer the tender offer closing, submit a new timeline relative to the tender offer and submit more information on the circumstances surrounding the reassignment of frequencies.

The SEC said a new offer period should also “recommence” not later than Oct. 17 this year.

In tracing how a company with control of the much coveted 700 MHz frequency be valued at such a “low” price when PLDT and Globe paid SMC a total consideration of P69.1 billion primarily for that asset, Papa Securities ealirer complained that all of frequency allocations of Liberty unit Tori Spectrum (formerly Wi-Tribe Telecoms) had been assigned to BellTel. As Tori Spectrum had already ceased to be the assignee of these frequencies, the value of the frequencies was not considered in the valuation when the telecom assets were sold to PLDT and Globe.

The corporate regulators now wanted Vega Telecom to submit more information on such reassignment of frequencies that had resulted in the “confusion” in the valuation of Liberty shares.

The MRSD had sent a show-cause letter dated Sept. 9  to Liberty for failure to timely disclose the reassignment of frequencies in the required reportorial requirements. In the letter, the SEC department noted that the non-disclosure and omission of such reassignment rendered subsequent disclosure or statement therein “untrue” and “misleading.”

“It cannot be denied that the disclosure of the frequency assignment was first made only on July 28, 2016, or approximately 16 months after the occurrence of the reportable material event on the company’s definitive information statement filed on July 28, 2016,” the MRSA said.

Citing the explanation of San Miguel Corp. which previously controlled Liberty, the MRSD said it was clarified that Tori Spectrum Telecom and its affiliates Bell telecommunications Philippines Inc. and Express telecoms Co. had entered into a unified rollout plan,  under which BellTel would shoulder all the capital and operating expenditures for the network and use a combined cellular mobile 2G and 4G technology.

The SEC said the earliest disclosure was made on Liberty’s definitive info statement for 2016 annual meetings filed last July 28.

After recently considering additional information from San Miguel, the SEC now directed Vega to submit more information on the following:

discussion on the circumstances surrounding the reassignment of frequencies;

disclosure of the consideration received from the assignment and how it was reflected in Liberty’s financial statement and a discussion of the impact;

breakdown of purchase price paid by PLDT and Globe to SMC, consisting of payment as actual purchase price, payment for outstanding advances and payment of assumed liabilities; and

detailed discussion of recent information on the unified rollout by Tori spectrum.