Gokongwei confident deal with Salim on PLDT, Boni stakes to push through

Business taipan John Gokongwei Jr. expressed confidence yesterday that the deal he entered into with the Salim group of Indonesia to acquire First Pacific's stakes in Philippine Long Distance Telephone Co. (PLDT) and Bonifacio Land Corp. (BLC) through a joint venture company would push through before Sept. 30 this year.

"Tony Salim will push it through," the patriarch of the Gokongwei group of companies told The STAR in an exclusive interview at his office in Robinsons PCI Tower in Ortigas.

Gokongwei was referring to Anthony Salim, (the son of Soedomo Salim) with whom he met for eight times since March 3 to hammer out the deal.

"Whether they like it or not, Salim is going to sell, if not now, later. And knowing him, he will see it through," he stressed.

Gokongwei, chairman emeritus of JG Summit Holdings Inc., who earlier announced his retirement, took the whole Asian business community by surprise when he forged a deal with the young Salim, heir to the Salim business empire started by his father Soedomo that includes First Pacific Co. Ltd., for the purchase of the latter's controlling interests in PLDT and Bonifacio Land Corp.

Last June 4, the Gokongwei group signed a memorandum of agreement with First Pacific that calls for the creatioin of a joint venture arrangement that will assume FPC's 24.4 percent interest in PLDT and 50.4 percent stake in BLC. The Gokongweis will have a two-thirds stake in the joint venture company that will be created while FPC will have the remaining one-thirds.

Over a three-year period, the Gokongwei group will be paying $616.6 million for the two-thirds stake in the joint venture arrangement, that will also assume the $106 million loan extended by First Pacific subsidiary Larouge to Metro Pacific, secured by 50.4 percent of BLC's assets.

The deal with Salim took only eight meetings in several countries including China (Beijing and Shanghai), Singapore, and Hong Kong.

According to Gokongwei, it all started during the 100th anniversary celebratioin on Citigroup in Beijing last March 22 when Salim approached him and offered to sell Bonifacio Land to him. "I said no, not Boni and then he offered PLDT next. The next morning, he went to my suite and we talked," he told The STAR.

He aid the only reason why Salim has not replaced his nominees in the board of PLDT and BLC is because he had already given the proxy nominations and he is required to do it 60 days before the June 11 PLDT stockholders' meeting. "In my case, by next year, he will definitely do it," Gokongwei emphasized.

There were persistent reports in the market yesterday that any remaining hitch to the transaction being completed will be resolved when Japan’s Nippon Telegraph and Telephone Corp. (NTT) announces on Friday that it will support FPC in its bid to sell part of its Philippine business interests.

NTT, a strategic partner of FPC owning 15 percent of PLDT, has a shareholders’ agreement with FPC that gives the former the right of first refusal in case the latter decides to sell its stake in PLDT.

Whether or not NTT will exercise the right of first refusal remains a big question, but rumors are rife that FPC was already able to convince NTT to support the sale. There were reports that PLDT president Manuel V. Pangilinan, who is opposing the sale to the Gokongweis, is going to Japan together with PLDT chairperson Antonio O. Cojuangco to personally convince NTT to exercise its right. Some say that Pangilinan’s trip is pushing through on Thursday while others say that FPC has dissuaded him from doing so.

Asked to comment about a PLDT board resolution denying the Gokongwei group any chance of conducting a due diligence of the telecom firm being a competitor, Gokongwei said that he will not buy without first doing a due diligence review. "It’s okay if I’m just paying $90, but we are paying more than $650 million," he emphasized.

He said First Pacific will have to facilitate the conduct of a due diligence by the Gokongwei group, even as he expressed confidence that First Pacific will find a way ‘one way or the other.’

The Gokongwei group earlier said that the $616.6 million price attached to the transaction is still subject to a due diligence review of PLDT.

The group requested for a 30-day due diligence which will begin from the time both the Gokongwei group and First Pacific declare it to start. No such date has been agreed yet.

"They have to deliver all the conditions so that we can conduct the due diligence. First Pacific will have to pave the way. It is up to them and it is their call right now," Gokongwei’s personal lawyer Perry Pe said.

As far as the PLDT board resolution that prevented the Gokongwei group from conducting a due diligence review is concerned, Pe said that was unfair.

"Without understanding the structure, the PLDT board unilaterally passed a resolution declaring that we cannot do due diligence. The resolution was passed without the benefit of proper advice," he said.

Pe added that at the end of the day, the big question is whether all these legal obstacles being put up by the PLDT board will benefit the stockholders or certain members of the board only.

Another legal issue being raised by sectors opposing the sale is the right of first refusal of Cojuangco over certain shares being sold by First Pacific in PLDT.

First Pacific holds both direct and indirect interest in PLDT, the first through Metro Pacific Resources Inc., and the second through the Philippine Telecommunications Investment Corp. (PTIC).

PTIC, which has a 15.4 percent stake in PLDT, is 53.9 percent owned by Metro Pacific Asset Holdings Inc. and Larouge BV, both First Pacific subsidiaries. The balance of 46.1 percent is said to be owned by Cojuangco.

Pe stressed that Cojuangco has no right of first refusal because even his ownership of PTIC is still being contested.

As far as the three-year lock up provision that allegedly prevents First Pacific from selling its shares until March 2003, Gokongwei’s lawyer explained that this provision was inserted in the shareholders’ agreement between FPC and NTT to protect the latter. "This means that FPC cannot sell to the likes of Deutsche Telekom or other competitors of NTT and we are talking about huge telcos, not Digitel," he said.

In another development, the Gokongwei group said the Securities and Exchange Commission (SEC) cannot compel it to submit a copy of the memorandum of agreement with FPC involving the latter’s sale of its stake in PLDT.

Gokongwei’s personal lawyer Perry Pe told The STAR that the Philippine SEC has no jurisdiction either over First Pacific nor over the Gokongwei group.

"The SEC has to acquire jurisdiction over you before they can compel you. It has no jurisdiction over an entity known as the Gokongwei group which is just an aggrupation. Neither does it have jurisdiction over the person of Mr. John Gokongwei because the SEC has to regulate corporations, not individuals," Pe explained.

He added that even First Pacific was not asked to furnish a copy of the MOA by the Hongkong Stock Exchange.

"First Pacific gave a copy of their disclosure statement and for the Hongkong bourse, that was enough. In Hongkong, you first have to submit your public paid announcement and they will have to approve it before it is disseminated to the public. That is compliance already. The MOA between First Pacific and the Gokongwei group is a private document between two parties who formed a joint venture," Pe, a senior partner of the Romulo, Mabanta, Sayoc and Buenaventura law office, said.

Meanwhile, Gokongwei disclosed that under the deal with First Pacific, "we reserve the right to appoint the president of PLDT." Everybody else will keep their jobs, he added.