European investors eye First Pacific’s 24.4% stake in PLDT

A group of European investors based in Singapore has offered to acquire the 24.4 percent stake of First Pacific Co. Ltd. in the Philippine Long Distance Telephone Co. (PLDT).

The offer was made to PLDT president and chief executive officer Manuel V. Pangilinan, who however, found the valuation placed on PLDT "too low" to seriously consider the proposal.

Together with other offers, the proposal from the European group will be presented to First Pacific in Hong Kong. An earlier agreement between First Pacific and the Gokongwei group for the latter to acquire the controlling interest in PLDT failed after the Gokongwei group withdrew its offer for failure of First Pacific to deliver some of the conditionalities contained in the memorandum of agreement, such as facilitating the conduct by the group of a due diligence investigation of PLDT.

"With the termination of the MOA between First Pacific and the Gokongwei Group, there have been a number of groups that wish to make an offer for the stake of First Pacific in PLDT, primarily due to PLDT’s strong financial and operational performance," according to PLDT vice-president and spokesperson Menardo Jimenez Jr.

The STAR reported yesterday that businessman Antonio O. Cojuangco and Pangilinan, together with a strategic foreign investor, are finalizing an offer to buy out First Pacific’s stake.

"My understanding is that at the appropriate time, Mr. Pangilinan will be presenting these options to First Pacific, though I must make it very clear that Mr. Pangilinan himself is not personally part of the group or groups that intend to make offers," Jimenez said.

However, The STAR learned that while Pangilinan is joining Cojuangco in the offer, he cannot officially do so due to conflict of interest. Aside from heading PLDT, Pangilinan is the executive chairman of First Pacific. "First Pacific may have to ask Pangilinan to resign if he does that because of conflict of interest," a PLDT official said.

Highly-placed sources told The STAR that following the withdrawal by the Gokongwei group of its offer to acquire First Pacific’s interest in PLDT, the top management of the Hong Kong company is now ready to sit down and negotiate with Cojuangco and Pangilinan.

It was learned that the Pangilinan-Cojuangco offer had been brought up to the First Pacific directors earlier, but the latter could not officially acknowledge it due to the exclusivity granted to the Gokongwei group which expired last Sept. 30. "But now that the deal with the Gokongweis has collapsed and there appears no other serious offer, First Pacific will have no choice but to accept the offer of Pangilinan and Cojuangco if it wants to get its money soon," the source said.

First Pacific last June 4 entered into an agreement with the Gokongwei group, represented by John Gokongwei Jr. for the sale of the former’s 24.4 percent controlling interest in PLDT and 50.4 percent share in Bonifacio Land Corp. The agreement called for the creation of a joint venture company to be two-thirds owned by the Gokongwei group and one-third by First Pacific.

In consideration of the two-thirds stake in the joint venture arrangement, the Gokongwei group was going to pay $616.6 million over a three-year period and another $109 million for the Bonifacio Land stake.

However, the MOA contained certain conditionalities such as the conduct by the Gokongwei group of a due diligence investigation of PLDT and Bonifacio Land. The PLDT board and management, led by Pangilinan and Cojuangco, refused to allow the group and First Pacific access to documents and information other than those publicly available, saying that PLDT would be subject to undue disadvantage since the Gokongweis own Digital Telecommunications (Digitel).

Because of the failure of First Pacific to convince PLDT management to cooperate and because it would not agree to buy without first conducting due diligence, the Gokongwei group withdrew its offer.