Tonyboy seeks loan to back bid

A group led by businessman Antonio ‘Tonyboy’ Cojuangco is currently in talks with Bank of Commerce to syndicate a loan that will be used to finance the group's bid to exercise Cojuangco's right of first refusal over the shares of Hong Kong-based First Pacific Co. Ltd. in the Philippine Telecommunications Investment Corp., a private company that owns 15.4 percent of Philippine Long Distance Telephone Co. (PLDT).

Sources from the banking industry told The STAR that the amount being raised would be between $50 to $100 million (P2.5 to P5 billion) and Bank of Commerce has been tasked to put together the facility that would be participated in by both local and foreign banks and financing institutions.

The STAR learned that if Cojuangco, whose family owns 49 percent of PTIC, exercises his right of first refusal over the 54- percent interest of FPC in the company, this could be one way of preventing FPC from selling part of its stake in PLDT held through PTIC.

FPC has a 24.4 percent controlling interest in PLDT, which it wants to sell to a joint venture arrangement between FPC and the Gokongwei group. These PLDT shares are held by FPC through several companies, including Metro Pacific Resources Inc. (60 percent owned by FPC affiliate Metro Pacific Holdings Inc.) which owns 10.12 percent of PLDT and PTIC (53.9 percent owned by Metro Pacific Assets Holdings and FPC subsidiary Larouge BV).

FPC acquired its initial 17.2 percent interest in PLDT in November 1998 from shareholders of PTIC, including the Cojuangco group (comprising Imelda O. Cojuangco, estate of Ramon O. Cojuangco, Antonio O. Cojuangco, Ramon O. Cojuangco Jr., Miguel O. Cojuangco,Trinidad O. Cojuangco Yulo, and Victoria O. Cojuangco Yulo) and through purchases on the Philippine Stock Exchange.

There is reportedly an agreement between two FPC affiliates (Metro Pacific Assets Holdings Inc., which is a Philippine company and Larouge BV, a Netherlands company) and the Cojuangco group that contains a clause whereby the Cojuangco group waived their right of first offer or refusal as shareholders in PTIC subject to a proviso that the right shall apply if the FPC affiliates that acquired the Cojuangco group's PTIC shares in November 1998 cease to be FPC affiliates and if then FPC president Manuel V. Pangilinan is removed from the company.

A highly placed source explained that one of the reasons why the Cojuangco group, through Tonyboy Cojuangco, agreed to sell FPC, despite its reputation of buying a company and selling it later for a profit, is because of Cojuangco's long-standing (25-year) friendship with Pangilinan.

Cojuangco, currently PLDT chairman, and Pangilinan, who is FPC executive chairman and president and chief executive officer of PLDT, are now leading the opposition to the planned sale by FPC of is PLDT interest to the Gokongwei group.

While FPC said that its shareholders' agreement with Japan‚s NTT Communications Corp. (which has a 15 percent stake in PLDT) provides that prior to March 24, 2003, FPC will maintain its direct or indirect interest in PTIC and that the sale to the Gokongweis will not violate this provision, a highly placed source explained that the only way for to stop FPC from selling PTIC's stake in PLDT is for the Cojuangco group to buy out FPC's interest in PTIC.

"Mr. Cojuangco just wants to be ready with the funds in case he will have to exercise his right of first refusal," sources said.

For Cojuangco to exercise his right over FPC's stake in PTIC, he will have to come up with roughly $50 million, but sources said that he wants to raise as much as $100 million just in case he might need a bigger amount.

While the Sandiganbayan has ruled that the Cojuangco family rightfully owns these shares in PTIC, the Presidential Commission on Good Government (PCGG) has appealed the ruling to the Supreme Court, claiming that there is enough evidence to prove that these shares were ill-gotten and that the Cojuangco group was just a dummy of the Marcoses.

But sources close to the Cojuangcos revealed that as it stands right now, the Cojuangco family has rightful ownership over these shares and thus can exercise their right of first refusal, until the High Court decides otherwise.

While FPC claims that that particular "side agreement" involving Pangilinan was not minuted at any meeting of the board of directors of FPC then, it said in a recent statement that Pangilinan recalls that they were discussed with certain individuals, who were authorized to negotiate, settle, and implement documentation in November 1998, and who were directors and senior Hong Kong executives of FPC at that time.

The current directors of FPC who were also executive or independent directors in November 1998 are Pangilinan, Edward Tortorici, Edward Chen, and David Wang. Current executives, who are members of senior management, at the time, are Ronald Brown and Michael Healy, group counsel/corporate secretary and chief operating officer, respectively.