PLDT to issue new voting stock
NEW VOTING SHARES The telecommunications giant PLDT’s board has approved the issuance of 150 million voting preferred shares, which would reduce foreign groups’ interests in the board to 36 percent.
The Philippine Long Distance Telephone Co. (PLDT) has approved the creation of new voting shares to comply with a recent Supreme Court ruling on the telco’s ownership structure.
Last month, the high tribunal determined that PLDT is majority-owned by foreigners which, in effect, violates the Constitution.
In a statement on Tuesday, the company said its board had authorized the issuance of 150 million voting preferred shares. This will make up 45 percent of the company’s new capital structure.
This will also reduce the interests of foreign groups in the company’s board to 36 percent, which is below the constitutional limit of 40 percent.
But PLDT maintains in a statement that its “current share structure fully complies with the Constitution.”
According to the telco, the high tribunal’s decision was not final and “still subject to reconsideration.”
“The Supreme Court’s ruling, until reversed, could disrupt PLDT’s operations and transactions,” PLDT chairman Manuel V. Pangilinan said. “We assure our shareholders and the general public that they will continue to reap the benefits from PLDT’s continued services.”
The new shares will be issued to members of the PLDT board and to the company’s employee Beneficial Trust Fund.
The high court en banc, by a vote of 10-3, ruled that the term “capital”—when applying the Constitutional limit of 40 percent foreign ownership in public utilities—referred only to shares of stock entitled to vote in the election of directors.
PLDT argued that in past rulings, the high court had always adhered to the doctrine that nonvoting shares were counted in determining the level of a company’s foreign ownership.
About 64 percent of PLDT’s voting shares are held by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT DoCoMo.
If nonvoting shares are included, foreign groups hold only about a tenth of the company’s stock.
On Tuesday, lawyer Wilson T. Gamboa, who questioned PLDT’s ownership structure, urged the Securities and Exchange Commission (SEC) to suspend or revoke PLDT’s franchise because of the violation in foreign ownership restrictions.
Following its ruling, the SC issued an order of mandamus compelling the SEC to conduct a public hearing to determine any violations of the constitutional cap on foreign equity in public utilities and impose sanctions on violators.
Gamboa also urged the SEC to conduct a thorough investigation on how First Pacific and NTT DoCoMo were able to acquire 40 percent of PLDT.
