Hike in Digitel capital to P25B OKd
The Securities and Exchange Commission (SEC) has approved the increase in Digital Telecommunications Philippines Inc.’s (Digitel) capital stock to make way for the conversion of its liabilities into common shares.
These liabilities, which are held by parent firm Philippine Long Distance Telephone Co. (PLDT), are in the form of convertible bonds and zero coupon notes. These were acquired by PLDT last year from holding firm JG Summit Holdings Inc.
Digitel, operator of mobile brand Sun Cellular, wants to increase its capital to P25 billion from the current P9 billion.
The convertible bonds acquired by PLDT accounted for a significant portion of the P69.1 billion it paid to secure a 51-percent stake in Digitel.
The bulk of the amount paid by PLDT was used to pay the P34.1 billion in advances of JG Summit to Digitel which, in the past decade, had been losing money.
Only P5.2 billion went to pay for the 3.27 million Digitel shares, or 51 percent of the total capital stock, held by JG Summit. The conversion of the said bonds and notes will give PLDT about 90 percent stake in Digitel.
JG Summit received as payment for its Digitel stake P69.1 billion worth of PLDT shares, priced at P2,500 each.
Acquiring Digitel allowed PLDT to strengthen its hold of the country’s telecommunications industry. The PLDT Group now corners two-thirds of the market, in terms of subscribers and revenues.
PLDT’s tender offering for Digitel shares held by minority shareholders, at P1.6033 each, ended Monday. PLDT shares closed at P2,728 per share Monday, down by 28 points, or 1 percent.
