The fight goes on for Liberty
The corporate secretary of Vega Telecom, Inc. wrote a letter dated Oct. 6 to the editorial staff of this paper to correct what they said were “inaccuracies” in my Sept. 27 column entitled “Relief for Liberty Stockholders.”
To allow equal chance to be heard, the main body of the letter is reproduced as follows: “We write to correct the inaccuracies in the news article published in your paper last Sept. 27, 2016 entitled ‘Relief for Liberty stockholders’ by Den Somera. The article indicated an erroneous statement that 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.’”
“On the contrary, Vega Telecoms, Inc. (VTI) has complied with the letter of the Securities and Exchange Commission (SEC) dated Sept. 16, 2016, to provide in an amended SEC Form 19-1, information relating to the breakdown of the purchase price paid by PLDT and Globe to SMC for the acquisition of VTI shares, as well as any outstanding advances and assumed liabilities. Please note that the subject of the acquisition was shares of VTI, and not shares of Liberty Telecoms, Inc. (LIB). LIB is only one of the many VTI subsidiaries.”
Tender offer
“The Amended Tender Offer Report states that, ‘On May 30, 2016, Globe and PLDT acquired from SMC, on a 50-50 basis, 100 percent of the entire outstanding and issued capital stock of VTI, including the outstanding shareholder and other advances in VTI and its subsidiaries (the VTI Acquisition). The total consideration for the VTI Acquisition is P52,080,764,982.00, consisting of as purchase price for the VTI shares and as purchase price for the outstanding advances. In addition, Globe and PLDT agreed to assume the liabilities of VTI in the amount of P17,021,535,948.00, which was the balance as of April 30, 2016.”
To be fair, the questioned statement in the article must be recognized as to how the minority stockholders saw the submitted amended tender offer. The use of the open and close quotation marks would have also made this clear, that it was lifted from a source.
This may also explain why the questioned statement could be found in the second to the last paragraph under the subject “Bone of Contention” in my article, which was basically a space for the minority stockholders’ side of the issue.
Bottom line spin
There is no denying the 700MHz radio frequency was originally assigned to Liberty. The fact remains that its “reassignment” to Bell Telecommunication Philippines, Inc. was not disclosed to the public until one year after, an undeniable violation of the duty to give timely information to the investing public. To be exact, public disclosure was made only after Vega was acquired by PLDT and Globe Telecom.
Also, while Vega cited accounting principles and legal inferences to justify that the subject frequency had no innate value (that was why the frequency had no assigned valuation in Liberty Telecoms’ financial statements), the fact remains as well that PLDT and Globe Telecom affirmed in their public statements these frequencies were valuable in enabling them to greatly expand coverage as well as enhance the efficiency of their internet services, ergo higher revenues and bigger profitability. It cannot be denied, therefore, that by their own assertions, the subject frequencies became a major factor in their purchase of Vega at the consummated deal price.
The minority stockholders also felt Vega did not fully comply with what they understood was in the SEC directive. Vega merely described the particulars of the deal price as follows: A total acquisition cost of P52.09 billion, consisting of P30.01 billion as purchase price for its shares and P22.08 as purchase price for Vega’s outstanding advances, plus P17.02 billion assumed liabilities (incurred by Vega as of April 30, 2016). Vega stopped short of detailing how its shares were valued, how and what the advances were, what the liabilities were and where they came from.
Thus, notwithstanding the documents presented to support the regularity of the deal, the minority stockholders certainly felt their company has been deliberately placed at the losing end. Their struggle is a fight against the excesses of the rule of the majority.
I’m not, nor have ever been, a stockholder of Liberty. I have no intentions of bending the facts, and I have no interest in the controversy except to see how SEC will protect the investing public’s minority interests in the exercise of its mandate.
