PLDT okays issuance of new shares to increase Filipino stake

MANILA, Philippines—Market heavyweight Philippine Long Distance Telephone Co. (PLDT) has approved the issuance of new shares that would allow the firm to increase voting shares held by Filipino stockholders to comply with the foreign ownership cap in the Constitution.

After previously failing to muster a quorum for the vote in 2011, about 90 percent of the PLDT shareholders in a meeting on Thursday approved to give the company’s board the power to issue 150 million new low-yield, voting preferred shares to be issued solely to Filipino citizens.

The new shares would be issued at P1. PLDT chairman Manuel V. Pangilinan said the company’s employee Beneficial Trust Fund (BTF) would likely be the entity to acquire the new shares.

“The BTF and PLDT have aligned interests. The BTF is the employee pension fund so whatever’s good for PLDT is good for its employees,” Pangilinan said.

He said offering the shares to the public would be detrimental for the company given lower price compared to common shares. PLDT common shares closed at P2,600 apiece on Wednesday.

If and when the new shares are issued, Filipino shareholders will end up owning 65 percent of PLDT’s voting rights, with the balance left in the hand of foreign owners.

Under local laws, foreigners are not allowed to own over 40 percent of companies in key industries such as telecommunications and transportation.

The new shares will be issued in light of the Supreme Court (SC) decision in 2011 that ruled that PLDT’s capital structure—wherein majority of its voting shares are owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT DoCoMo—violated the constitutional restriction on foreign control of public utilities.

Even as it approved the issuance for new shares, PLDT maintains that its current capital structure complies with the Constitution because majority of its shares, made up of both voting common and non-voting preferred shares, are owned by Filipinos.

The Supreme Court ruling against PLDT stemmed from a petition by PLDT shareholder Wilson Gamboa who earlier asked the high tribunal in 2007 to nullify the sale of the government’s stake in the company to the First Pacific group, which is represented in the country by Pangilinan.

Pangilinan and PLDT president Napoleon Nazareno have appealed the decision.