Liberty minority’s last chance

Racing against the deadline of a tender offer, 10 minority stockholders of Liberty Telecoms Holdings, Inc. (LIB) recently sought the services of a law firm.

The law firm wrote Vega Telecom, Inc. to “cease and desist” from pursuing the terms of the process. Copies of the letter were given to entities and individuals related to the case: Securities and Exchange Commission (SEC), Philippine Long Distance & Telephone Co., Inc. (TEL) Globe Telecom, Inc., Philippine Stock Exchange (PSE) chair Jose T. Pardo, PSE president and CEO Hans B. Sicat, PSE senior vice president and COO Roel A. Refran, Shareholders’ Association of the Philippines president Francis Ed. Lim and Institute of Corporate Directors CEO Ricardo N. Jacinto.

The stockholders took note of San Miguel Corp.’s (SMC) admission of not having disclosed the transfer of the prized 700MHz frequency band originally held by Liberty Telecom to Bell Telecommunications Philippines, Inc.

To make the long story short, SMC claimed it did not need to disclose the reassignment of the frequencies when it was approved by the National Telecommunications Commission (NTC) in March 2015.  The approval, it said, was considered a “soft information” and as such, “its untimely disclosure then would not only have been premature, but would have stymied its development and implementation.”

“More importantly, such untimely disclosure would have created undue market speculation,” SMC added.

Stand

Through their counsel, the stockholders insisted proper disclosures should have been made on the back of existing laws and regulations of the SEC. The minority stockholders added they were completely denied of chances to be heard about the issue relating to LIB’s share in the sales proceeds of the radio frequency.

The minority stockholders also found the tender offer price of P2.20 per share too low.  They said they needed a better explanation as to how the buyout price was arrived at.

According to the rehabilitation records they got, LIB has the following radio frequency assets as early as 2009: “Channels 1 to 12 with frequency range of 233,000 to 400,000, MHz Bandwidth of 103, for voice and data application; channels 13 to 164 with frequency range of 507,850 to 758, MHz Bandwidth of 48, for broadband application (radio/wimax); channels 165 to 211 with frequency range of 1237.5 to 1535.0, MHz Bandwidth of 148, voice and data application; for a total MHz Bandwidth of 299.”

They noted Punongbayan & Araullo (P&A) did not appear to have considered these assets in LIB’s valuation.

Bottom line spin

The minority stockholders also bewailed the alleged inaction of the PSE on the issue. They claimed the bourse was still under the spell of the “old boys’ club.”

While the minority stockholders ended their letter to Vega Telecom with an appeal for “transparency and good governance,” they said they would not stop from seeking all sorts of all legal remedies to protect their interests.

However, they also appeared to be willing to sit down with Vega and allow the ongoing tender offer to proceed if the offer price was reconsidered. They said the P2.20 per share offer was “valued way below the value placed upon the shares of the majority stockholders.”

The tender offer period will end tomorrow noon. Thus, today is the last chance of stockholders to get out of a company about to be delisted.  Failure to do so will make one face the prospects of getting stuck with it.

Vega, according to the minority stockholders, has refused to accept their hand-carried letter on Thursday.  This forced them to send their letter (and to all parties) through LBC last Friday.

The ongoing issue is likened to the classic struggle of the “common man” against the “establishment.”  And, considering that the tender offer period is practically over today, some minority stockholders might just act desperately to call on their champion—President Duterte’s Dial 8888 hotline—for timely intervention. This will be interesting.

(You may reach the Market Rider at [email protected], [email protected] or at www.kapitaltek.com.)