Relief for Liberty stockholders | Inquirer Business
Market Rider

Relief for Liberty stockholders

/ 12:17 AM September 27, 2016

The fight of the minority stockholders of Liberty Telecoms Holdings, Inc. (LIB) for their shares in the company took a new twist as an amended tender offer was submitted by Vega Telecom, Inc. to the Securities and Exchange Commission (SEC) last week.

Vega’s move was also made in compliance with the directive issued earlier in the week by the regulatory body which, among others, required for a new offer period providing a more reasonable time for the minority shareholders to evaluate and assess the situation.


Surprisingly, the amended tender offer only left the minority stockholders more distressed and with more questions: Vega extended the offer period to Oct. 20, originally set on Sept. 21, but it basically kept the same terms and conditions filed on Aug. 19, particularly its much debated offer price of P2.20 per share.

The amended offer also conveniently skirted issues raised in the SEC directive to discuss and explain the details surrounding the “reassignment” of the prized 700MHz frequency from LIB’s subsidiary Tori Spectrum Telecom, Inc. (Tori Telecom) to affiliate Bell Telecommunications, Inc. (Bell Telecom).


Bone of contention

To recall, when Philippine Long Distance & Telephone Co., Inc. (TEL) and Globe Telecom, Inc. bought the controlling shares in Vega, both heralded it as a strategic move that would allow them access to the coveted and powerful 700MHz.

In separate press statements, they boasted the radio band will help them attain efficiency, stability and dependability in the delivery of their internet services.  Frequencies include the “723-738MHz/778-793 MHz and 2555-2595 MHz” originally assigned and held by Tori Spectrum.

LIB’s minority stockholders noted the assignment of the prized radio frequency was still with Tori Spectrum, LIB’s subsidiary, when it got out of corporate rehabilitation in May 2015. As the stockholders observed, too, the “reassignment” of said radio frequency to another entity outside of LIB should have been disclosed to the Philippine Stock Exchange (PSE).

San Miguel Corporation (SMC), Vega’s former controlling stockholder, took the blame for the non-disclosure. It claimed the reassignment of the radio frequencies was approved by the National Telecommunications Commission (NTC) in March 2015, but decided not to disclose it under the pretext that it was a “soft information” then.

SMC went on to further justify its act, saying “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.”

The stockholders also noted the amended tender report did not “include the breakdown of the purchase price paid by PLDT and Globe to San Miguel Corp. (SMC) for the shares, outstanding advances and assumed liabilities in Liberty Telecoms.”


Considering the foregoing, the minority stockholders of LIB could not accept the offer price of P2.20 per share.

Bottom line spin

Interestingly, the SEC has championed the cause of minority shareholders in a similar case involving listed firm Union Cement Corp. (UCC), now known as Holcim Philippines, Inc. (HLCM).

National Life Insurance Co., (NLIC) a minority stockholder of UCC, disputed the voluntary tender offer of Cemco Holdings Corp. (CHC), the major shareholder of Union Cement Holdings, Inc. (UCHI) which, in turn, controls UCC.

NLIC requested instead for a mandatory tender offer that, in effect, forced CHC to make a higher offer price since it has to go through SEC’s valuation process anchored “in the interest of fair dealing to the minority stockholders.”

Opposing SEC’s active hand in the process, CHI went to the Court of Appeals (CA). The appellate court eventually junked its bid twice.

CHI then elevated its case to the Supreme Court.  The high court, however, affirmed SEC’s authority and power to promulgate rules and regulations.  Among them “is the protection of the investors and the minimization, if not total elimination, of fraudulent and manipulative devises.”

(You may reach the Market Rider at [email protected], [email protected] or at

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